Good morning, and welcome to Thursday. Here’s what you need to know:
Markets rally. US industrial production increased by 0.7% in March, beating expectations of a 0.5% rise. The signal that the American economy is recovering well bouyed stocks and the Dow and the S&P500 finished up 1%, while the NASDAQ, which has been lagging for the past week, was up 1.3%.
China questions. The better-than-expected Chinese GDP result of 7.4% helped lift markets yesterday. The Nikkei soared an extraordinary 3%, but the underlying data point to a continuing slowdown in the world’s second-largest economy. Westpac’s China watcher Phat Dragon pointed to the “extremely weak” nominal GDP growth rate of 7.9% compared to 9.6% a year ago. In Australia today just before the rise for the Easter break, we get the quarterly NAB business survey, always a closely-watched leading indicator, and car sales data is out at 11.30am AEST.
Weird week. It has been a volatile week for the Australian market with the ASX following the US sell-off in momentum stocks but recovering in recent day. CMC Markets Chief Strategist Michael McCarthy writes on Business Insider that we might just need to get used to this as the progress of the global recovery remains uncertain. “Sentiment and prices are likely to fluctuate significantly; meaning both bulls and bears can highlight reports and price moves that support their view. As investors in the middle switch from one camp to the other, sentiment swings could be more extreme. As sentiment swings, so should markets. The natural conclusion is that volatility will continue to increase,” he says. More here.
Google misses. The tech giant booked revenue of $15.4 billion for Q1, for $15.45 billion, and EPS of $US6.27 versus analysts estimates of $US6.44. The growth in its paid clicks – 30% in good quarters – is slowing down as users migrate to mobile, where ads are cheaper. The stock fell 5% in after-hours trade.
Ferry tragedy. A South Korean school may have lost 260 students when a passenger ferry capsized and sank yesterday en route to the resort island of Jeju. There’s a heartbreaking account of a girl calling her grandmother in terror from the ship which is believed to have struck rocks in poor visibility. Almost 300 people from the 462 on board are missing.
Deals market remains strong. Stocks may be volatile but early data from the Intralinks deals monitor, which gauges M&A activity in the Asia-Pacific, points to a 10% quarter-on-quarter rise in early-stage mergers and acquisition in the region, and 18% up for the year. The survey of 1,000 M&A professionals finds three-quarters expect M&A activity to increase over the coming six month.
Record VC round. Email marketing company Campaign Monitor has raised $250 million in the largest VC investment ever in an Australian company. Customers of the Sydney-based startup, founded by Dave Greiner and Ben Richardson, include Apple and Facebook.
New Premier for NSW. Barry O’Farrell will resign as leader of the Liberal Party today, after it was revealed he wrote a thank-you note for a bottle of wine that he had denied ever receiving in a hearing before a corruption inquiry. (The biggest problem was that the note emerged after his insistence that he never received the bottle; the executive who gave it to him, while securing a meeting soon afterwards, didn’t get the contract he was seeking.) O’Farrell’s Treasurer, Mike Baird, is expected to replace him after reportedly striking a deal this morning with the other potential challenger, Gladys Berijiklian. One wildcard option being floated is that the party could refuse to accept O’Farrell’s resignation, or that he would stand again for the leadership. There are many MPs who don’t want to see him go – his Planning Minister Brad Hazzard said this morning that he had urged O’Farrell not to resign. But it’s a marginal scenario. One other point: the 1959 Grange O’Farrell got would have been close to undrinkable anyway, according to wine expert James Halliday. (“He got dudded, didn’t he?”, Halliday said.)
Triguboff offer. One of the big themes in the recent gains in Australian property, especially in the hot Melbourne and Sydney, has been the effect of increasing demand from Chinese investors. This is writ large in news this morning that Harry Triguboff, who owns the Australian apartment empire Meriton, has received an offer for half the company for $3 billion from Chinese buyers.
Royal visit. The Duke and Duchess of Cambridge are off to the Blue Mountains today after landing in Sydney yesterday, where the visited the Opera House and got the obligatory photos with the Harbour Bridge in the background. Sure, everyone talks about the Duchess’s fashion selections every time she steps out; but where does he get those terrific suits?
Bonus item: It may be staged, but this is what can happen when you stand by a rail line trying to get a selfie with a train behind you. The conductor can kick you in the head.
Have a great Easter break, and stay away from train selfies. I’m on Twitter: @colgo
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