The Australian market was lower this week but the ASX 200 managed to hold above the 5,700 mark. The RBA’s July minutes were taken to be more hawkish than expected by the market. The market overreacted by assuming that an interest rate increase was near. This is not the case, particularly given that inflation is unlikely to trend within the target this year, wage growth remains low, and household debt levels remain historically high. On a sector level, the best performers were financials, real estate and industrials. The big banks reacted positively to APRA’s new 10.5% target for common equity tier 1 capital ratios. The big banks are expected to meet the “unquestionably strong” benchmark by 2020, adding clarity for the banks and investors. On a company level, Santos Limited was one of the best performers following the release of their second quarter activities report which indicated a reduction in net debt and production costs, as well as upgraded guidance for production and sales. Myer Holdings was one of the worst performers after announcing that retail trading conditions remained weak, impacting their profits. In global markets, Wall Street was mixed despite all benchmarks hitting new records throughout the week following the release of a pleasing batch of quarterly earnings reports. Republican leaders in the Senate ditched their effort to repeal and replace Obamacare, also known as the Affordable Care Act. This raised more concerns over the cohesion of the Republican Party and the implications for proposed tax reform, causing the U.S. dollar to slump. European markets mostly higher, supported by well-received earnings results. The Euro jumped to a two-year high after European Central Bank President Mario Draghi confirmed interest rates were to be left unchanged. Asian markets were higher, helped by expectations that the Bank of Japan will maintain easing monetary policy for an extended period of time, and higher oil prices due to a decline in U.S. crude stockpiles. The Australian dollar was higher against major global currencies this week, rising above US79c, the highest level in over two years. The RBA’s July minutes were taken as more hawkish than expected by the market and this drove the Australian dollar higher.