International News (Issue 428) – 2 December 2016
So there were lots of things across the world to note this week.
On the data-front, both US and Chinese manufacturing improved again in November. As per the chart in the ‘Australian news’ section, global growth momentum continues to gain pace and is now at a 3-year high.
In China this week we saw more signs of policy tightening, with reports that loan-to-value ratios were being lowered in major cities as a means to curb China’s rampant housing bubble.
Amongst the technology players this week there were mixed reports. Apple (APPL) shares fell as reports emerged that they were reducing orders from suppliers to the i-phone 7 after disappointing sales.
Much of the NASDAQ index had begun to weaken in recent days anyways, in response to higher bond yields, but this news was a new negative for suppliers to APPL and APPL itself.
On the flipside, Samsung (005930) rose to record highs this week after confirming more shareholder friendly policies, including increased dividends and buybacks.
Lastly, this weekend holds the Italian Referendum on constitutional reforms. Much has been made of the significance of the referendum given the Prime Minister Matteo Renzi has previously suggested he would resign if the vote goes against him.
The polls currently suggest the vote will be a ‘no’, leading to potentially the resignation of the PM.
Should Renzi resign there are two key concerns of the markets, a) that his banking sector guarantee scheme for Italy’s enormous bad loan problem will collapse, sparking a broader loss of confidence in Italys fragile banking system, and b) that it could prompt fresh elections, which could lead to the anti-EU Five-Star Movement increasing its power in the parliament.
Let’s see how it all plays out this Sunday!
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