Economic and market news
In Australian economic news, the Reserve Bank of Australia left official interest rates on hold yesterday. In the media release, it highlighted that the full impact of the cumulative 4 percentage points of increases since last May is yet to be felt. It suggested that this, combined with the uncertainty of the economic outlook, had led it to pause in its policy tightening cycle. However, the Governor’s noted that more interest rate increases may be required to ensure that inflation returns to target in a reasonable timeframe. He stressed that developments in the global economy, trends in household spending, and the forecasts for inflation and the labour market will be particularly important to future decisions. This is the second ‘pause’ in the cycle that started in May 2022, with the RBA also having left its rate unchanged in April this year. Initial reaction from economists and markets was that there would likely be two more increases before rates peak.
Alongside this, headline inflation was said to have unexpectedly eased in May. It fell to 5.6 per cent for the year to end-May, from 6.8 per cent in April. The easing in inflation was attributed to an expected fall in fuel prices, and a decline in holiday travel and accommodation prices. However, it was noted that the measure of inflation that excludes volatile items fell only modestly, suggesting that broader price pressures remain.
Retail turnover in May came in higher than expectations, boosted by sales activity. However, it was suggested that this pick up was an ‘anomaly’ and consumers would be forced to continue the cut backs seen over the past six months, as the full extent of the increases in official interest rates feed through to mortgage payments.
In economic news from the United States, there was a range of data that suggests there are pockets of strength in the economy, which has eased fears of recession. These included consumer confidence figures that hit the highest level since the start of 2022.
Australian indices
ASX 200: Rose over the week, 2.26 per cent, to close at 7279.0 points on Tuesday.
All Ordinaries: Also rose, 2.45 per cent, in the week, closing at 7478.9 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 |
0.25
|
91.45 |
4.06% |
+2 |
+42 |
+160 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
94.34 |
3.92% |
+3 |
+50 |
+76 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
91.49 |
4.01% |
+4 |
+37 |
+45 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
88.86 |
4.20% |
-2 |
+4 |
+49 |
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) |
|
4.10 |
No change (4 July 2023) |
+0.25 (6 June 2023) |
1.35 |
Currencies(source:RBA)
As at the close on 4 July, the AUD/USD had fallen 0.88 per cent in the week, to 0.6653. The AUD/RMB had fallen 0.57 per cent in the period, to 4.8130.
Commodities
It has been announced that OPEC and Russia will make another cut to oil production in July. This is in order to support prices, in the face of weakening demand as the world economy slows and energy transitions start to gain momentum.
Venture Capital
Cardihab
Stoic investee Cardihab announced an exciting new partnership with Roche Diagnostics Australia. The partnership will bring a shared focus on innovation that has the potential to improve patient outcomes and care delivery in Australia.
Property
Elanor Investors Group made an announcement related to its acquisition of Challenger’s Real Estate Funds Management business.
Sydney house prices are said to have rebounded by 6.7 per cent since bottoming out January. However, June’s data suggests that the market is ‘losing momentum’, with an increase of 1.7 per cent this month, slightly down on May’s 1.8 per cent. Home lending and building approvals jumped in May, which is attributed to the turn in prices.
Alongside this, auction clearance rates remained above 70 per cent again this week, but were by 7.5 percentage points down on the previous week at 71.2 per cent.
In the commercial property sector, industrial property values apparently 'surged' 4 per cent in the second half of the financial year, contrasting falls in other sectors of the market.
