The Border Watch : March 4th 2014
Business Ukraine concerns weigh on dollar SYDNEY: The Australian dollar has hit a one-month low as concern about the crisis in the Ukraine weighs on market confidence. At yesterday’s close, the local unit was trading at US89.24c, down from 89.56c on Friday. During the day, it fell as low as 88.91c, the currency’s weakest level since February 5. At the weekend, Russia’s parliament voted to allow troops to be sent into the Ukraine, a decision that has been condemned internationally as a violation of Ukrainian sovereignty. FXCM market analyst David de Ferranti said the geo-political troubles have soured market sentiment. “Ukrainian tensions are at the forefront of price action today as traders move away from high-yielding currencies like the Australian dollar towards safe-havens like the greenback and yen,” he said. “This has put a set of positive domestic economic data including jobs ads and housing figures in the background.” AMP chief economist Shane Oliver said the problems in the Ukraine were adversely impacting markets. “The Ukrainian economy is too small and its problems too specific to have a direct impact on the global economy,” he said. “My suspicion is that the Ukraine is just another distraction for markets that will fade in the months ahead. But it may take a while to settle down and the uncertainty could get worse before it gets better.” Mr de Ferranti said if tensions in Eastern Europe escalate then that could push the Australian dollar down towards 88.50c and further overshadow local economic events. Mining sector driving growth Resources push profits up as manufacturing struggles SYDNEY: Company profits have risen for the fourth consecutive quarter, with mining and resources still playing a big part in driving economic growth. But other sectors are still dragging their feet. Company gross operating profits rose 1.7 per cent in the December quarter, official figures show, mostly in line with market forecasts of a 2 per cent rise. JP Morgan economist Tom Kennedy said the result means tomorrow’s December quarter gross domestic product figures will be quite solid. “When you look at the profits data it is still quite reliant on the resource sector,” he said. “The rebalancing of growth to the other sectors is still playing out very slowly and we’re not quite there yet.” Mr Kennedy said even as mining and resources investment peaks and then falls, exports from those new project that have been built are becoming the big driver for economic growth. “You’ve got other sectors out which aren’t turning a profit and losing money,” he said. In the year to December, gross operating profits in current prices and seasonally adjusted terms were up 10.7 per cent, the Australian Bureau of Statistics said yesterday. St George senior economist Jo Horton said Australia is starting to reap the rewards of a decade surge in spending on the mining and resources sector. “The mining investment boom has laid the foundations for increased production capacity and we are seeing the results in higher production volumes and increased mining profits,” she said. “Mining profits accounted for 34.3 per cent of total company profits in the December quarter and 32.2 per cent of profits over the year to the December quarter.” Ms Horton said other sectors, in particular manufacturing, continue to weaken. AAP Cool pay deal for Coca-Cola boss MELBOURNE: Beverages supplier Coca-Cola Amatil will pay former chief executive Terry Davis $150,000 a year for three years in exchange for him not working for competitors in Australia. Mr Davis yesterday stepped down as group managing director of Coca-Cola Amatil, to be replaced by Alison Watkins, the former chief executive of grains marketer GrainCorp. Mr Davis will continue to work out his notice period at Coca-Cola Amatil until August 31 this year. He will help and advise Ms Watkins as required. His retirement was announced in March 2013. Coca-Cola Amatil said it would make a total cash payment of $2.9 million to Mr Davis in respect of his short-term and long-term incentives. “Mr Davis will be paid $150,000 per annum for a three-year period in exchange for him agreeing not to work, consult or take up board positions with pre-determined competitor companies in Australia,” Coca-Cola Amatil said. Mr Davis was group managing AAP director of Coca-Cola Amatil for 11 years. AAP in Brief Committee backs Interest rate stance CANBERRA: A key federal parliamentary committee has backed the Reserve Bank’s stable interest rate policy. Just 24 hours before the central bank holds its latest monthly board meeting, the House of Representatives economics committee has tabled the findings of the RBA’s twice-yearly parliamentary appearance before its members. “The committee considers the current monetary policy settings to be appropriate,” committee chair Kelly O’Dwyer said yesterday. New home sales on the improve BRISBANE: The number of new home sales increased by 0.5 per cent in January, after a small fall in December, data from the Housing Industry Association shows. January’s new home sales were also up 17 per cent up on the same month in 2013, and in the three months to January sales were up 22.3 per cent compared with the same quarter 12 months earlier. HIA senior economist Shane Garrett said new home sale numbers have been encouraged by low interest rates and confidence in the housing market. WorleyParsons wins $132m bitumen job MELBOURNE: WorleyParsons has won a $132 million contract to provide Sweet deal: Coca-Cola announced yesterday a $150,000 a year deal with outgoing CEO Terry Davis, assuring he won’t work for a competitor for three years. Eight-month high in Febuary job ads MELBOURNE: Job advertisements rose by more than 5 per cent in February to their largest number in eight months. The growth in job ads comes after the unemployment rate hit 6 per cent in January, its highest level in a decade. However ANZ economist Justin Fabo said more evidence was needed to support a turnaround in the labour market, as seasonally adjusted job ad figures were often volatile in the early months of each year. Job ads rose by 5.1 per cent in February, after no movement in ad numbers in January, as tracked by ANZ’s monthly job ad series. There was an average 131,189 newspaper and internet jobs advertised – seasonally adjusted – in February, the highest number since May, but 4.8 per cent lower than in February 2013. Internet job ads rose 5.3 per cent for the month and newspaper job ads – which currently account for less than 5 per cent of the ANZ job ads – declined 0.5 per cent. Mr Fabo said forthcoming job ads data would be important in indicating how well the economy was tracking. “If much of the recent improvement in job ads is maintained in coming months it would support our view that economic activity will improve gradually this year,” he said. 10 - The Border Watch, Tuesday, March 4, 2014 Picture: AP Mason to step down as AMP chairman SYDNEY: AMP chairman Peter Mason will step down at the company’s annual general meeting in May. Mr Mason, who has been chairman of the company for eight years, will be replaced by former Macquarie Group executive and current AMP board member Simon McKeon. Jones followed outrage from investors over controversial share purchases made by two of the retailer’s directors and approved by Mr Mason. Mr McKeon Peter Mason The announcement comes just AAP weeks after Mr Mason announced he plans to retire as chairman of department store business David Jones. His decision to leave David praised Mr Mason’s contribution to AMP, including his leadership during the global financial crisis and his role in the company’s takeover of AXA Asia Pacific. “Peter Mason has served and guided AMP through a successful expansion into Asia and a period of significant change in a challenging environment,” he said. engineering and procurement work for a bitumen refinery project in Canada. The North West Redwater new bitumen refinery project is in Sturgeon County, northeast of Edmonton, Alberta, close to major crude oil pipelines in Albert, WorleyParsons said yesterday. The work will be performed by WorleyParsons in its Edmonton, Toronto and Mumbai offices, starting immediately. Inflation nears RBA target range AAP SYDNEY: Inflation is rising towards the top of the Reserve Bank of Australia’s target range, putting pressure on the central bank to raise interest rates, according to a survey of price movements. The TD Securities-Melbourne Institute Monthly Inflation Gauge shows prices rose 0.2 per cent in February and were 2.7 per cent higher than a year ago. TD Securities Head of Asia Pacific Research Annette Beacher said a rising inflation rate would put pressure on the RBA to lift the cash rate, currently at 2.5 per cent, by the end of the year.
February 28th 2014
March 5th 2014