Economic and market news
New data on inflation in the United States was stronger than expected for the third month in a row. Pressures on the cost of fuel and rents pushed overall consumer prices up by 0.4 per cent in March, and by 3.5 per cent over the year (up from 3.2 per cent in February). Alongside this, retail sales data were more than double what was expected, rising 0.7 per cent in March, after an upwardly revised 0.9 per cent in February.
Jobless figures hit a two year high of 3.9 per cent and wage growth slowed, while employment remained resilient. US job growth in February was led by service sectors, including healthcare, leisure and hospitality.
The resurgence in inflation and the underscoring of the resilience of the US consumer led to a slashing of expectations that the US Federal Reserve will start cutting rates in June. Commentators also suggested that the observed strength and stubbornness of inflation in America takes official interest rate cuts off the table in Australia.
New data on the Chinese economy also showed growth in the first quarter of the year was stronger than expected. In the quarter GDP grew 1.6 per cent. Over the year growth was 5.3 per cent, slightly faster than the 5.2 per cent expansion in the year to end-December. Both measures were above market forecasts. Despite these figures, the government unveiled a new round of both fiscal and monetary stimulus measures amid concerns that the current figures are still boosted China’s post-pandemic rebound.
Elsewhere, the European Central Bank held its interest rate steady, choosing to wait for confirmation that rapidly receding inflation is firmly under control before cutting rates. In particular, it noted that while ‘most measures of underlying inflation are easing ... domestic price pressures are strong and are keeping services price inflation high’.
Australian indices
ASX 200: Fell another 2.71 per cent over the week to close at 7612.5 points on Tuesday.
All Ordinaries: Also fell 2.71 per cent in the period, closing at 7862.3 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
|
100.59 |
3.93% |
+5 |
+7 |
+97 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
96.80 |
3.96% |
+6 |
+17 |
+92 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
95.29 |
4.33% |
+7 |
+20 |
+101 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
86.02 |
4.52% |
+7 |
+18 |
+85 |
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 16 April, the AUD/USD was down 2.75 per cent over the week, closing at 0.6426 on Tuesday, having hit the lowest point since November (0.6406) during the day’s session. The AUD/RMB was down 2.70 per cent, in the period, closing at 4.6511 on Tuesday.
Venture Capital
Morse Micro
Stoic investee Morse Micro shared a case study with Agricultoutlook about how its technology is helping more farmers to adopt precision agriculture and remote monitoring.
Property
Stoic’s property investment partner Elanor Investors Group shared its insights into recent trends in the commercial property sector with the Australian Property Journal. In particular it discussed we are seeing a long-term structural change or a short-term cyclical challenge.
In the residential property sector, this week’s data show a slightly softer picture than of late. There was a sharp drop in Sydney’s preliminary clearance rate to 74.3 per cent from 81.6 per cent a week ago. This outturn pulled the combined capital-city clearance rate down to 72.7 per cent from 75.9 per cent last week. Commentators suggest that this reflects more caution on the part of borrowers as the chance of an interest rate cut recedes.
