Economic and market news
The end of July round of interest rate decisions by major central banks has led to a relatively quiet week for markets and commentators. As such, economics and market news this week was focused on China, where concerns about the loss of momentum are building.
In Australia, new data on Tuesday show that consumer confidence survey rose 2.7 per cent in July but remains at ‘deeply pessimistic’ levels. Meanwhile, business confidence remained well below its long-term average. However, business conditions remained steady, down on last year but above the long‑term average.
This week new data raised concerns that China is sliding into deflation. China’s consumer inflation rate was flat in June while factory-gate prices fell further. The consumer price index is unchanged last month from a year ago, and was the weakest rate since prices fell in February 2021. This again fuelled speculation about the potential for an economic stimulus package.
On Tuesday the Chinese Government released an initial package of measures for the property market, extending loan relief for developers. It was reported that authorities have also flagged that more economic support is imminent.
In the United States, a raft of labour market data confirmed that its economy is showing remarkable resilience in the face of ongoing monetary policy tightening expressly designed to slow activity.
Australian indices
ASX 200: Fell over the week, 2.34 per cent, to close at 7108.9 points on Tuesday.
All Ordinaries: Also fell, 2.18 per cent, in the week, closing at 7315.8 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
|
91.26 |
4.18% |
-10 |
+18 |
+158 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
93.62 |
4.08% |
-10 |
+29 |
+92 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
90.14 |
4.18% |
-10 |
+23 |
+67 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
87.22 |
4.36% |
-9 |
+16 |
+69 |
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 11 July, the AUD/USD rose 0.44 per cent in the week, to 0.6682. The AUD/RMB was almost unchanged in the period, closing at 4.8133 (up from 4.8130 last Tuesday).
Commodities
The World Gold Council released a report on the prospects for the gold price. It reportedly suggests that the effect of COVID-19, turmoil in Europe, and banking failures in the United States have supported the price of gold to $US2000 ($2992) an ounce. However, they opine that it would take an global economic ‘hard landing’ to reset gold’s record high ($US2075 per ounce). The research apparently suggests that a milder contraction, which involved shallow recession in the US and weak growth in developed markets, would support gold at or slightly below its long-run return.
Venture Capital
CutThrough Ventures published its 2023 Q2 venture capital funding report. The headline figures for 2023 Q2 closely resembled those of Q1, showing a decline in deal sizes and count across most stages relative to their peak in early 2022. However, it highlighted that insights from the Investor Sentiment Survey and market soundings of local investors and founders suggest a significant mood shift in the June quarter. The ‘fog of fear and uncertainty’ that had been looming over local and global markets in the latter half of 2022 and Q1 2023 appears to be lifting.
Jayride
Stoic investee Jayride announced that it has grown 99% in FY23 off the back record global travel activity in the Northern Hemisphere summer, and strategic activity to grow trips and unit economics to be cash flow positive. Jayride was also discussed in The Australian this week, as part of a feature on ASX companies meeting consumer needs for better travel experiences post-pandemic.
Property
The house auction clearance rate jumped again this week, as supply of property shrank.The clearance rate nationally rate jumped 4.2 percentage points on the previous week to hit a five-week high of 74.5 per cent. Meanwhile overall listings dropped 8.1 per cent on the previous week and 12.9 per cent lower than the corresponding week last year – due to a combination of the winter slowdown, school holidays, and concerns about further interest rate increases.
