AUSTRALIAN MARKET WRAP
The death of Queen Elizabeth II has dominated the news since Friday. Alongside this, the flow of political and financial news has been reduced by decisions to suspend both the Australian and UK parliaments except for ceremonial purposes, a number of financial and policy announcements have also been delayed (including the next interest rate decision by the Bank of England), and all planned industrial action by unions in Australia has been cancelled.
New data from the Australian Bureau of Statistics release during the week show that the economy grew by 0.9 per cent in the June quarter and 3.6 per cent over the year. This was in line with expectations. The Australian economy is now $2.1 trillion, 4.4 per cent bigger than it was before the onset of the pandemic.
Growth in activity was driven by continued strength in household consumption, which increased by 2.2 per cent in the June quarter and is now 6 per cent higher over the year. The biggest increases were in spending at cafes, restaurants and transport services. Spending on clothing and footwear also rose. The boom in net exports lifted GDP growth by 1 percentage point.
Following on from this, above-average trading conditions and profitability were said to have pushed measures of business confidence higher in August, but successive official interest rate rises are dampening consumers’ willingness to spend money on non-essentials, according to NAB’s monthly business survey. Measures of trading conditions, employment and profitability also remained above average. Meanwhile, consumer confidence was said to have lifted for the first time since last November, but to have remained weak.
Following on from the latest increase in the official interest rate on Tuesday 6 September, the Reserve Bank Governor gave a major speech, which the markets and commentators interpreted as an indicator that the pace of policy tightening may now slow. His speech also discussed the nature of the shock surge in Australian and global inflation, and the risks that changes in inflation psychology pose to the economy.
Meanwhile, the European Central Bank raised its rates by 0.75 percentage points, flagged further increases to come, and warned of a significant economic slowdown ahead. US Federal Reserve Chair Jerome Powell was also said to be signalling his determination to check inflation with another 0.75 percentage point increase at the next policy meeting.
In relevant political news, the new Australian Government is apparently considering aspects of its overhaul of the immigration system. Media commentary this week has centered on potential changes to, or abolition of, the Significant Investor Visa.
Australian indices
ASX 200: Rose 2.68 per cent over the week, to 7009.7 points at the close on Tuesday.
All Ordinaries: Also rose, 2.80 per cent in the past week to 7253.7 points at the close on Tuesday.
Currencies
As at the close on 13 September, the AUD/USD was slightly up, 1.09 per cent on last week, at 0.6874. The AUD/RMB was also up, 0.82 per cent, in the week to 4.7579.
It was reported that the Yuan is on track to see its largest ever annual fall against the US dollar. This movement is because of the divergence in monetary policy settings and trajectories, as a result of the relative strength of the two economies. The weakness in the Chinese economy was said to be despite the Chinese Government’s attempts to stimulate activity, in the face of ongoing lockdowns to enact its COVID-zero strategy.
Commodities
Analysis by Standard & Poor’s suggests that demand for copper is likely to ‘explode’ from 25 million tonnes in 2021 to 50 million tonnes in 2035; this can be largely attributed to the fact that renewable power and electric vehicle applications will need to be in place by 2035 to meet net-zero targets in 2050.
Government Bonds
Government Bond Yields (Source: Bloomberg)
|
NAME |
COUPON |
PRICE |
YIELD |
1 DAY |
1 MONTH |
1 YEAR |
|
GTAUD2Y:GOV Australia Bond 2 Year Yield |
2.75
|
99.69 |
2.92% |
-4 |
+7 |
+295 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
4.75 |
106.28 |
3.26% |
-5 |
+6 |
+262 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
1.25 |
81.15 |
3.57% |
-6 |
+14 |
+230 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.75 |
99.58 |
3.77% |
-5 |
+14 |
+211 |
Reserve Bank of Australia Rates (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) |
|
2.35 |
+0.50 (6 September 22) |
+0.5 (6 September 22) |
0.10 |
Venture capital
Company updates
Cardihab
Helen Souris, CEO of Stoic investee Cardihab, spoke to healthtech podcaster Peter Birch about the 'why' behind the company’s digital cardiac rehab program, and the benefits to patients and healthcare professionals.
BioScout
Stoic investee BioScout has revealed that it has successfully deployed 16 new units across Queensland and Victoria, and has expanded its network to include surveillance of both a strawberry and a spice crop in Queensland.
Morse Micro
Stoic investee Morse Micro announced that it has successfully completed a $140 million Series B funding round, led by the MegaChips Corporation.
OccuRx
Stoic investee OccuRx has raised $16 million to fund a clinical phase study for its oral therapy to treat chronic kidney disease, a leading cause of death.The round was jointly led by Brandon BioCatalyst and Uniseed and also includes a $1.5 million grant from biomedical incubator CUREator.
