Shares rebound, thanks to Europe easing
The Bank of England and European Central Bank surprised markets with their dovish actions, which redirected some attention away from the US Federal Reserve and its plans for less aggressive monetary policy.
The Fed would have enjoyed seeing the central banks take an easier stance, market watchers said, because US asset prices could be supported by investors trying to take solace from the easing in Europe.
Australia's Reserve Bank kept rates on hold, at 2.75 per cent, but governor Glenn Stevens still made the headlines.
The day after the RBA's board meeting he made some "light-hearted" comments about the amount of time the board had spent deliberating on its rate decision.
He joked that they had deliberated "for a very long time" and Australia's dollar shed half a cent in moments. Deputy RBA governor Philip Lowe later said Mr Stevens had been "misinterpreted".
For the week, the S&P/ASX 200 Index gained 39.1 points, or 0.8 per cent, to 4841.7 points, while the broader All Ordinaries gained 51 points, or 1.1 per cent, to 4826.4.
Markets are showing increasing signs of a "perverse" relationship with global quantitative easing programs, fund managers said.
Bill Bovingdon, chief investment officer at Altius Asset Management, said QE programs had obviously become a bit of a lifeline for markets but there were signs that that "culture of addiction" was now growing across other markets, such as bonds.
"It wouldn't be lost on the US Fed just how perverse the relationship has become," Mr Bovingdon said.
"Equity markets ... seem to be cheering every bit of weak data because it means they might continue to get the drip feed of more quantitative easing, [but then they] sell off sharply every time it looks like some data which suggests that economies are recovering.
"As bond managers, what we're trying to manage is the cross-current. We think we've got a very broad-based sustainable recovery in the US ... but it will mean QE will have to be tapered at some stage."
For the week, BHP Billiton gained 23¢ to $31.60, after the mining giant said its new remote operations centre and trial of driverless trucks would boost productivity without sacrificing jobs.
Boart Longyear slipped 17¢, at 50.5¢, after the drilling services company said earnings might be downgraded further as market conditions deteriorate.
Brambles shed a cent to $9.33 after the pallet supplier said it would hive off its underperforming data management business Recall into a separate listed company.
Crown jumped 49¢ to $12.60, while rival Echo Entertainment slipped 30¢ to $2.76 after it was confirmed that Sydney would get a second casino from 2019 after the NSW government gave its backing to James Packer's proposal for a $1.5 billion resort.
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Shares rose after the Bank of England and the European Central Bank surprised markets with dovish moves, which eased global financial conditions. That shift redirected some attention away from the US Federal Reserve and helped support asset prices as investors priced in more accommodation from Europe.
The RBA kept the cash rate on hold at 2.75%. RBA governor Glenn Stevens made light‑hearted comments after the decision that coincided with the Australian dollar falling about half a cent, and deputy governor Philip Lowe later said Stevens had been misinterpreted — a reminder that comments from central bank officials can move currency and market sentiment.
The S&P/ASX 200 gained 39.1 points (about 0.8%) to 4,841.7, while the broader All Ordinaries rose 51 points (about 1.1%) to 4,826.4, reflecting a broadly positive week for Australian equities.
Fund managers said QE programs have become a market lifeline, creating a 'culture of addiction' where equity markets rally on weak data (hoping for more QE) and then sell off when data suggests recovery. That cross‑current complicates investment decisions because QE may need to be tapered as recoveries broaden.
BHP Billiton shares rose 23 cents to $31.60 after announcing a new remote operations centre and a trial of driverless trucks. For investors, this signals management is pursuing productivity gains through technology while saying it will boost efficiency 'without sacrificing jobs.'
Boart Longyear fell 17 cents to 50.5 cents after the drilling services company warned earnings might be downgraded further as market conditions deteriorate. Investors should watch subsequent earnings guidance and industry demand indicators for signs of recovery or further weakness.
Brambles shed a cent to $9.33 after announcing it will separate its underperforming data management business, Recall, into a separately listed company. The move signals a strategy to streamline operations and focus on core businesses, which investors often view positively if the spin‑off clarifies group prospects.
Crown rose 49 cents to $12.60 while rival Echo Entertainment fell 30 cents to $2.76 after the NSW government backed James Packer’s $1.5 billion proposal for a second Sydney casino to open from 2019. The decision benefited Crown’s share price and weighed on Echo as market expectations about competition and future revenues shifted.
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