China’s GDP soars, Australian shares jump again: Economy roundup

China’s GDP grew by 7.9% during the second quarter due to higher government spending, leading some analysts to believe a global recovery may be on the way.

The National Bureau of Statistics also released data that showed domestic demand picked up the slack from a lack of exports, but warned that any recovery that is coming may be initially weak.

“It’s very encouraging, the 8% growth target is in sight,” Daniel Soh, an economist at Forecast in Singapore, told Reuters. “By now it’s clear that the fiscal stimulus package has offset the contraction in export activity.”

Back home, the Australian share market has opened 0.7% higher today due to strong results from Wall Street led by tech giant IBM, but has since lost ground.

The benchmark S&P/ASX200 was up just 3.5 points or 0.09% to 3999.1 at 12.00 AEST. The Australian dollar also rose to a two-week high of US80c.

Commonwealth Bank shares gained 0.4% to $39.55, with ANZ also rising 0.7% to $16.77. Westpac gained 0.4% $20.27 while AMP gained 1% to $4.96.

Myer predicts job losses under new IR regime

Myer Group chief executive Bernie Brookes has said that changes to retail awards due to commence in January will result in a rise in costs for consumers.

“The Government is going to cause inflation by raising the rates at which we have to pay casual and part-time staff on Saturdays and Sundays,” Brookes told the Herald Sun.

Brookes also said that major retailers have operated with bargaining agreements with staff in a “fair and equitable negotiation process”.

He also said that full-time jobs will be lost as a result of changes to the awards, and that the recent changes to industrial relations laws will be a challenge for the company.

Meanwhile, property fund Macquarie Countrywide Trust has said it will sell its stake in a US property portfolio for $US1.3 billion to help shift its focus onto local markets.

The sale will cancel $AUS1.38 billion of debt, and reduce the company’s gearing to around 36%. It said in a statement to the ASX that the deal would also mitigate near-term risks in refinancing and help strengthen its balance sheet.

Another Wall Street rally, good news for JPMorgan, IBM

Overseas, Wall Street lifted on positive results from IBM and JPMorgan. The Dow Jones Industrial Average rallied for a fourth consecutive day, closing up 95.61 points or 1.11% to 8711.82.

IBM recorded a 13% decline in revenue in the second quarter, from $US26.8 billion to $US23.3 billion from the corresponding period one year previously, while net profit rose from $US2.8 billion to $US3.1 billion.

The results, along with Intel’s positive financials yesterday, have signaled a possible recovery in the tech sector in the near future.

JPMorgan also said that increased trading results helped increased second-quarter profit to $US2.72 billion from $US2 billion from the previous corresponding quarter a year ago. Net revenue also jumped 41% to $US27.71 billion.

There was more good news for the US economy overnight, with the Labor Department releasing figures showing the number of initial claims for unemployment benefits dropped 47,000 to a seasonally adjusted 522,000 in the week ending July 11.

But while the figure was lower than expected, the Department of Labor also said that “the big drop is not necessarily a reflection of what is going on in the economy”.