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

 

Crown Accounts: Government Ekes Out Six-Month Surplus Of $9M

The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected. More>>

ALSO:

Almost 400 Jobs: Shock At Cadbury's Dunedin Factory Closure

Workers at Cadbury in Dunedin are reeling after learning this morning that the iconic Cadbury factory is to close, with the loss of almost 400 jobs... “The company had reported it was doing well and this has come out of the blue,” says Chas. More>>

ALSO:

Transport: Boards Of Inquiry For Auckland Roading Projects

Boards of Inquiry have been appointed to decide on two significant Auckland roading projects in a move which will get a decision by the end of the year, Environment Minister Dr Nick Smith and Conservation Minister Maggie Barry announced today. More>>

ALSO:

Three Months On: Quake Reciovery In Kaikōura And Elsewhere

Three months after the magnitude 7.8 earthquake on 14 November, encouraging recovery progress is being made in affected communities. More>>

ALSO:

Jetstar, Qantas For Govt Transport: Government Still In Talks With Air NZ

The government is still negotiating with national carrier Air New Zealand in a cross-agency air travel contract that will add a number of new airlines to the list of approved flyers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news