Economic and market news
In recent weeks economic and market discussion has moved to a greater acceptance that monetary policy settings in the developed world, including Australia, may not loosen anytime soon. While policy decision-makers have been talking for some time about the ‘stickiness’ of inflation, particularly services inflation, and the difficulty of the ‘final push’ to get it within target bands (commonly around 2 per cent), markets have taken longer to pull back on pricing for successive cuts.
In this context in Australia, there have been mixed views about what the Federal Government might do in the May budget to appease those calling for further ‘cost of living relief’. While the Treasurer has talked for some time about the importance of measures that support those who are most vulnerable but don’t reignite price pressures, this week there have been signs from him and the Prime Minister that there may be more ‘cash splashed’ next month.
Business advocates and financial media have been very vocal about the need for the Government to focus on policy that will boost productivity and set Australia up for continued prosperity, most particularly the need for wholesale tax reform rather than ‘political tinkering’.
In economic news, new data show that Chinese investment in Australia has slumped to record lows. This is amid the economic slowdown at home and a redirection of funds towards developing countries involved into its Belt and Road initiative.
State-owned and private Chinese company investment in Australian companies fell 36 per cent to just $1.3 billion in 2023, compared with $2.1 billion the year before, according to new data by KPMG and the University of Sydney.
Australian indices
ASX 200: Fell 0.81 per cent over the week to close at 7824.2 points on Tuesday.
All Ordinaries: Fell 0.79 per cent in the period, but managed to stay above the 8000 threshold closing at 8081.2 points on Tuesday.
Government Bonds
Government Bond Yields (Source: Bloomberg)
|
NAME |
COUPON |
PRICE |
YIELD |
1 DAY |
1 MONTH |
1 YEAR |
|
GTAUD2Y:GOV Australia Bond 2 Year Yield |
4.25
|
100.91 |
3.77% |
-3 |
+6 |
+95 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
97.51 |
3.80% |
-3 |
+16 |
+89 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
96.54 |
4.17% |
-2 |
+20 |
+99 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
87.60 |
4.36% |
-3 |
+18 |
+82 |
Reserve Bank of Australia (Source:RBA)
|
RBA CASH RATE TARGET (RBATCTR:IND) CURRENT (per cent) |
MOST RECENT DECISION (percentage points) |
MOST RECENT CHANGE (percentage points) |
1 YEAR PRIOR (per cent) |
|
4.35 |
+0 (19 March 2024) |
+0.25 (7 November 2023) |
3.60 |
Currencies (source:RBA)
As at the close on 9 April, the AUD/USD was up 1.82 per cent over the week, closing at 0.6608 on Tuesday. The AUD/RMB was up 1.81 per cent, in the period, closing at 4.7800 on Tuesday.
Venture Capital
New data show that Australian start-ups raised $703.1 million of capital in the quarter to end-March. This was slightly above the $650.2 million raised in the same period a year earlier. However, it was a 45 per cent drop from the $1.3 billion raised in the final quarter of 2023.
It was also revealed that there were just 66 funding deals announced in the period which was the lowest number of announced deals in the six years that Cut Through Venture has tracked the sector, as the challenging venture capital fundraising environment persists. Looking at the detail of the deals, there was a notable decline in smaller deals. At all stages from seed onwards, deals were markedly larger than those at the same stage a year ago.
The quarter also celebrated a standout period for all-female founding teams, who achieved an all-time high in funding share and absolute dollars received in a quarter
Lenexa Medical
Stoic investee Lenexa Medical was showcased by major Australian network news outlet Channel 9 this week, discussing how their products can improve patient outcomes and save hundreds of thousands of dollars per year, by keeping the most at-risk patients safe from pressure injuries.
Property
It was reported that around three quarters of all properties up for auction this weekend were sold. The data show that the national clearance was at 75.9 per cent, with Sydney at 81.6 per cent and Melbourne at 70.6 per cent.
Alongside this, figures show that the strong demand is supporting housing prices, with growth nationally at 8.8 per cent for the year to end-March. At a state level, Sydney’s prices are up 9.6 per cent, Brisbane prices by 15.9 per cent, Adelaide by 13.3 per cent and Perth by 19.8 per cent.
The ongoing resilience of the housing market, despite the relatively high level of interest rates, is another factor leading to suggestions that the Reserve Bank will delay any loosening of monetary policy settings.
