Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Governor’s speech settles the mood

15.28 AEDT, Friday 22 February 2013

Governor’s speech settles the mood


By Tim Waterer (Senior Trader, CMC Markets)

With the FOMC playing the role of the Fun Police this week by contemplating stimulus withdrawal, financial markets have shown their petulant side after a period of prolonged best behaviour so far in 2013.

The Fed Minutes gave traders a glimpse into the QE-free future. Clearly the idea of the US economy having to support itself without relying on stimulus was too much to bear for investors at this stage, as evidenced by the size of the market downswings this week. Any winding down of asset purchases should signify an improving economy and one that is no longer in need of life support which by itself should be a good thing, but traders just don’t have the confidence in the economy to see it walking under its own power yet.

The speech by the RBA Governor appeared to come across as the voice of reason today in settling some rattled nerves. In fact, the rather hawkish tone struck by Glenn Stevens on the state of the global economy was in stark contrast to the risk-off conditions which sent equity markets plummeting the day prior. Based on the Governor’s comments today a conclusion could be reached that the level of interest rates has already bottomed out, which saw the AUD immediately come back into favour on the yield implications if in fact the end of the easing cycle has already been reached.

Australian investors appear to have dusted themselves off after the heavy fall on Thursday with the ASX200 posting a comeback performance to end the week. The relatively rosy tone conveyed by the RBA Governor earlier in the day appeared to rub off on investors who re-commenced the search for yield, with the banking stocks again helping to drive the local bourse higher. All in all it was a solid recovery on the ASX given the weak offshore leads as well as subdued performances across other Asian markets.
ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news