Tag Archives: USD

China’s State Administration of Taxation Reform

China’s State Administration of Taxation (“SAT”) put into effect on broadening the scope of tax benefit for Small-medium sized Enterprises

In its official website, China’s SAT issued a bulletin on 18 April 2014 (Caishui [2014] No.34) that all the Small-medium sized Enterprises, in compliance with specified conditions, may enjoy the tax benefit on Corporate Income Tax (“CIT”). The relevant main terms are extracted as follows:-

1. The Small-medium sized Enterprises in compliance with specified conditions may enjoy a preferential tax rate of 20% on taxable income regarding CIT;

2. At the time of annual reporting of CIT, the preferential tax benefit policy will be adopted without the requirement of obtaining formal approval in advance from the competent tax authorities;

3. The Small-medium sized Enterprises with current and cumulative taxable income not exceeding RMB100,000, of which examining accounts is required and tax is imposed at a fixed rate, are applicable to this tax benefit policy;

4. Newly-established Small-medium sized Enterprises with the taxable income not exceeding RMB100,000 can also enjoy the said tax benefit as well

The measures will enable more Small-medium sized Enterprises to enjoy the tax benefit on CIT so as to release more liquid working capital for investing in future business development. This is sure to benefit EVA jigsaw mats and gym mats manufacturers. It will benefit the broader market for these and other products.

Market Watch

On Friday Market Volatility dropped to the lowest level since March 2013, when the AUD was at 1.05 against the USD. The gauge known as the VIX has retreated 47% since hitting a 14 month high in February.

US stock markets closed at a record high on Friday after a rise in new homes sales and a solid result in the Markit manufacturing purchasing managers index which increased to 56.2 in the month of May.

The Australian share market closed the week in positive territory, recovering from a mining led slump on Monday and Tuesday after iron ore dipped below $100/ton.

There is a public holiday today in the US and in the UK today which could leave the markets quite flat today.

There were some major political events over the weekend, firstly the election in Ukraine where Poroshenko has won the presidential election based on exit poll & the European parliament election was also held on Sunday. These elections did not really impact the markets.

Gold futures fell for the second time three days as a sign of recovery in the US economy curbed the demand & WTI Crude oil futures climbed to a five week high after US crude inventories tumbled.

AUD/USD faces the potential tailwind of a solid CAPEX report (Thursday) amidst a range‑trading and a heavy USD. News of a successful “transition” in the Australian economy towards non‑mining business investment will be supportive for further gains in AUD/USD this week. AUD crosses are likely to strengthen this week, particularly AUD/EUR, which may set a new high for the year. The one exception to AUD cross strength isAUD/CAD, which is typically weak in May.

Jigsaw mat and gym mat futures are stable.

Australian Dollar Stabilises after getting whipped

The AUD improved in our day time session, on the back of positive Chinese manufacturing PMI numbers. However in the overnight session the Aussie slipped back to lower levels that we saw in early trading. The lower Iron Ore price seems to be weighing on traders’ minds, and technical traders are still looking at sell signals in the AUD USD cross.

The dollar is higher today and seems to be stabilising which is good news for 40mm jigsaw mats.

Market Watch

The S&P500 rallied 0.81% overnight erasing yesterday’s declines as the FOMC Meeting Minutes continued its dovish rhetoric and said continued stimulus would not risk sparking a jump in the inflation rate. Inflation is expected to remain within its 2 percent goal. Policy makers continued to say that last month the economy is showing signs of improvement and the job market is slowly picking up.

Further reduction in the monthly bond purchase program is likely to continue and they re-iterated that interest rates will remain on hold for a ‘considerable time’ once it concludes the purchase program. U.S 10-year notes yields rallied 0.85% on the back of the positive FOMC announcement, the yield gap between 5 and 30 year Treasuries widening to the highest level in a month.

Gold futures declined 0.50% as traders saw less need for the save haven metal once the FOMC announced there was no threat of inflation.

WTI crude rose to a one-month high after a government report showed that stockpiles tumbled last week as imports dropped to a 17 year low.

Australian Dollar Lower

The posted its first back to back loss this month yesterday and fell against all the other majors after the RBA statement release. The daily decline of 1% was the largest since February as the AUD succumbed volatility and fear for the first time in 2 months. Local data coming out today includes Westpac consumer sentiment survey and wage price index for the March quarter from the Australian Bureau of Statistics.

The decline in the AUD shouldn’t have an impact on imported goods such as jigsaw mats in the short term. Should it persist or even go lower there could be an impact. For jigsaw mats already on the high seas there will be no change in pricing. In any case Ezymats will remain the supplier of the cheapest and best jigsaw mats on the market.

Market Watch

Overview of the Markets

The majority of European and American Equity markets finished in the green with only modest gains as the Dow Jones Industrial Average closed 0.27% at 16,491.31, just shy of historical highs. The NASDAQ and S&P 500 also rose 0.52% & 0.37% respectively. The markets rallied on the back of further signs the world’s largest economy is still improving as US building permits rose to 1.08m over the 1.01m forecast.

Gold remained relatively unchanged with only a $0.20 decline to close the week at US$1,293.40 while WTI Crude Oil jumped $0.52 up to $102.02 a barrel.

Elsewhere tension are still at boiling point in the Ukraine as Civil War starts to look more and more likely with fighting continues to rage as we draw closer to the May 25th presidential elections.

The AUD finished up for the third straight week and continued its push for a fourth straight month of gains, the longest rally in 4 years for the Aussie currency. With the absence of any major data on Friday the AUD drifted within a tight range to close almost unchanged. With a relatively quiet week locally.

Jigsaw mats pricing remains stable. They will remain so as long as the dollar is strong. It has been consistently been trading above $0.93USD. The 40mm jigsaw mat pricing is between $25.00 and $30.00 per mat depending on pricing.

Market Watch

In local markets yesterday, there was little in the way of economic data releases although the fallout from the budget continues as opposition governments vow to block reforms citing a “budget built on lies” however the budget projections have had minimal impact on the markets thus far.

Across US markets yesterday it was another positive day with PPI, CPI, Philly Fed Manufacturing numbers and Unemployment claims all outperforming expectations. PPI figures, released overnight on Wednesday showed that prices have increased by 0.6% against an anticipated 0.2%. CPI data showed growth at 0.3% which is the biggest gain since June 2013 and unemployment claims fell to the lowest level since May 2007. The Philly Fed continued its recent run of form posting the third consecutive outperform with a 15.4 reading against the anticipated 13.9.

In Europe, data continues to disappoint with CPI numbers as expected but well short of the ECB target inflation of 1% Italian GDP actually showed a contraction of 0.1% against an expected gain of 0.2% although Germany outperformed slightly with 0.8% gain against a 0.7% expectation. The continued sluggish growth in the region coupled with ongoing tensions in the Ukraine has given rise to speculation of potential interest rate cuts by the ECB to negative territory or a possible QE program as adopted by the US and UK. The announcement of their next move is expected on 5th June.

Elsewhere tensions continue to rise between Russia and the Ukraine with the Ukraine pushing on with operations to remove separatists from eastern borders. If Russia was to disrupt elections in the Ukraine, the US and other allied forces would impose further sanctions on Russia, already suffering from slower growth as a result of current sanctions.

No local data today but the Chinese Foreign Direct Investment number out at lunchtime might spark some much needed movement. The number, which represents the total investment capital made by foreign enterprises, economic organizations and individuals, above the previous read of 5.5% could see a boost for the Aussie in afternoon trading.

Market Watch

WTI Oil rose to a three week high as government report showed stockpiles fell 592,000 barrels last week and US gasoline demand increased to six month highs. Gold rose to a one week high as mounting political unrest in Ukraine boosted demand for the metal as a safe haven asset.

US stocks fell from all-time highs sending benchmark indexes down from all-time highs as investors resumed selling in small cap and internet shares as company’s earnings were scrutinized. The S&P500 fell 0.50 percent after climbing above 1900 for the first time yesterday.

Yesterday’s trading session saw the Aussie Dollar make a short rally to test April’s highs coming from increased speculation the RBA will raise interest rates later this year. This fuelled more risk appetite buying and drove the market almost 50 points higher. However this was short lived as the overnight session managed to subdue this enthusiasm and we are now trading near yesterday’s open.

Overnight the main market mover was the US Dollar falling against a basket of major currencies for the first time in four days as Treasury yields declined on speculation the ECB will introduce easing measures to boost the EU economy by next month. The Euro slowed its recent selling as traders started to take profits following a solid week of selling waiting for further confirmation from tonight’s European Inflation numbers out of France and Germany.

The Greenback saw a better than expected PPI m/m number coming in at 0.6% compared to a forecast of 0.2%. This is a good indicator of consumer inflation, as this shows that when producers charge more for goods and services that the higher costs tend to be passed on the consumer. The market will be looking at Core CPI, Unemployment Claims and Philly Fed Manufacturing Index data tonight to see movements against the Aussie.

The jigsaw mats market is stable at the moment. There is sufficient supply even though demand is currently high. There continues to be demand from a broad range of users. May will see the arrival of yet another shipment of 40mm jigsaw mats for Ezymats. There is also talk of other thicknesses like 20mm and 300 and a high likelihood of vinyl mats hitting the market.

Foreign Exchange Outlook

The USD index has bounced off its lows, driven by the softer EUR. The US ten‑year continues to trade near the bottom of its 2014 range. US retail sales (Tuesday) and a speech by Fed Chair Yellen (Friday) are the US macro highlights. While US developments may cause some intra‑day volatility near‑term movements in the USD will be driven by ongoing reaction in the EUR to building expectations of future ECB policy easing and geopolitical tensions in the Ukraine. The USD should be supported near‑term, but over the medium‑term relatively lower US real interest rates and the US’ US$380 billion current account deficit should remain headwinds.

The Australian Federal Government Budget (Tuesday) is unlikely to have any lasting impact on the AUD. The budget should help underpin Australia’s AAA sovereign credit rating, at a time the transition in the domestic economy away from mining‑investment led growth is coming through. Expectations are that the Chinese economy picked up momentum in April (activity data due Tuesday) which should be AUD positive. It is expectedAUD/USD and selected AUD crosses (particularly AUD/EUR) to remain supported.

In Australian rates the highlight of the week is the Australian Federal Budget on Tuesday. A tight budget could lift expectations that the RBA is on hold for longer. There shouldn’t be a lasting impact in the rates market. Offshore developments such as tensions in the Ukraine remain a focus and should dominate moves in the long‑end.

Market Watch

A jump in China’s iron ore demand saw a renewal of risk appetite in the financial markets. This helped ASX rise 0.8% to close at 5476, further boosted by a revenue beat and dividend upgrade from NAB. Meanwhile in Europe ECB President Draghi managed to steal the limelight from Fed Chair Janet Yellen.

Mario Draghi indicated a strong signal that the ECB possess a challenge with deflation in the Eurozone and it is prepared to act, commenting that the ECB will adopt some sort of easing measures in June. Testifying to the US Senate, Yellen largely reiterated her previous day’s messages that interest rates are unlikely begin to rise until the economic conditions in US improve further.

Overseas equity markets rallied taking a lead from the Asia on the back of better than expected Chinese Trade balance data. In Asia the Nikkei finished up 0.93% and Hang Seng was up 0.42%. At close all the stock markets in US were up except Nasdaq due to recent crash in Twitter shares.

In commodities space Ukraine tension somewhat subdued demand for gold. The yellow metal traded sideways at $1289/oz while Oil dropped 0.5% to $100.25. Copper got a boost thanks to the Chinese data and traded at $3.08/lb.

The AUD rose to a three week high as job numbers surprised the market adding 14,200 jobs in April, smashing the forecast of 8,800 jobs. The unemployment rate remained firm at 5.80%. Trade figures in China helped improve overall sentiment in the Chinese economy and this carried over to our market, pushing the Aussie Dollar higher. Chinese exports climbed 0.90% in April from last year and imports gained 0.80% leaving a trade surplus of $18.46 billion.