Microsoft CEO's retirement announcement lifts market

Share Markets:

The US stockmarket gained on Friday night, led by Microsoft after CEO Ballmer unexpectedly announced plans to retire within 12 months.

The Dow rose 0.3%, the S&P 500 was up 0.4% and the Nasdaq gained 0.6%.

The stockmarket strength came despite the release of disappointing US economic data and therefore may not translate into gains for the local stockmarket today.

Bonds:

The release of weak US housing data on Friday night raised concerns higher mortgage rates may weigh on the economic recovery and saw investors rethinking the timing and degree of QE tapering.

This uncertainty led to a rise in US government bonds (yields fell). The Jackson Hole symposium of central bankers contained discussion on QE, however, there were no surprising policy revelations.

Foreign Exchange:

The soft US housing data weighed on the US dollar, sending it lower against the major currencies. 

The Aussie dollar gained sharply versus the US dollar following the release of the housing data, hitting a high of 90.54 US cents earlier this morning.

The Aussie appreciated slightly versus Sterling on concerns Bank of England's Carney may attempt to talk down market interest rates, given their sharp rise recently.

The New Zealand dollar weakened versus the Aussie overnight with the RBNZ's announcement of controls on mortgage lending continuing to weigh on the currency.

Commodities: 

The gold price gained on Friday night on expectations the Fed may hold off on QE tapering, following the US housing data.

Australia: 

There was no significant data released locally on Friday.

China:

Foreign direct investment jumped 24.1% in the year to July, well above consensus expectations for a 14.0% increase and up from 20.1% growth in the year to June.

Europe:

Euro zone consumer confidence rose from -17.4 to -15.6 in August, its ninth consecutive monthly gain, and the highest in two years.

German GDP growth was unrevised at 0.7% for Q2.

The detail in the report showed 0.5% consumption growth with Q1 revised down from 0.8% to 0.2%, a 1.9% bounce in capital spending after five quarterly declines and a 0.2 percentage point contribution from net exports after detracting 0.2 percentage points in Q1.

United Kingdom:

GDP growth was revised up to 0.7% in Q2, the equal strongest quarter of growth in three years.

Capital spending rose 1.7%, government spending was up 0.9%, while consumption rose just 0.4%. Exports gained 3.6%, while imports were up 2.5%.

A separate report showed business investment up 0.9% in Q2, after falling 1.2% in Q1.

BBA data covering 70% of the market showed 37.2k new mortgages were issued in July, down slightly from 37.3k in June, but up from 28.4k in the previous July, before the funding for lending scheme was introduced by the BoE and Treasury.

United States:

New home sales plunged 13.4% in July and sales in prior months were revised down sharply.

The July sales pace of 394k annualised is the weakest for the year so far and was almost 100k lower than the consensus forecast.

The slump in sales, despite an apparent shortage of established dwellings on the market, could be a further sign that higher mortgage rates are nipping the nascent housing recovery in the bud.



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