Economic and market news
New inflation data for the United States undershot expectations, causing a rally in share markets, the S&P index jumping more than 5 per cent. However, on Monday, one of the Federal Reserve Governors warned in a speech in Sydney that markets had over reacted to the inflation figures and ‘gotten way out in front’ on just one inflation outturn. In line with this, globally regarded commentor Mohammed El-Erian discussed the importance of central banks maintaining their focus.
Inflation during October in the United States was recorded at 0.4 per cent for the month and 7.7 per cent for the year, the lowest outturn since January. Commentators suggested that this deceleration may give the central bank some breathing space in its monetary policy tightening. The figure was said to show an unwinding in food price rises, which increased by 0.6 per cent in October down from a 0.8 per cent increase in September, and an easing (though still high) in the pace of rent rises.
There was reporting and commentary on the latest Chinese inflation data. It was said that falling factory gate prices over the last three months have led to a weakness in annual core inflation, which has dropped to 0.6 per cent. It was suggested that this will result in an exportation of deflation to Europe and America within months. It was noted particularly that the supply chain disruptions following COVID-19 have largely dissipated and oceanic shipping costs have returned to levels that restore the commercial arbitrage advantage to the Far East. All of this was considered significant in the trajectory of inflation in the developed world, and the associated monetary policy trajectory.
In news from China, it was announced that a number of measures would be taken to support the property sector, including winding back steps taken last year to cool the market. This was coupled with announcements on Friday about ‘tweaks’ to the COVID-19 quarantine rules. These actions together were seen as steps to support China’s ailing economy.
Australian indices
ASX 200: Rose 2.63 per cent over the week, to 7141.6 points at the close on Tuesday.
All Ordinaries: Also rose, 2.73 per cent in the past week, closing at 7345.4 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
|
94.31 |
3.18% |
+2 |
-19 |
+251 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
96.78 |
3.44% |
+2 |
-24 |
+207 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
1.75 |
83.37 |
3.75% |
-1 |
-25 |
+199 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.48 |
4.11% |
-1 |
-66 |
+204 |
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) |
|
2.85 |
+0.25 (1 November 22) |
+0.25 (1 November 22) |
0.10 |
Currencies (source:RBA)
As at the close on 15 November, AUD/USD had risen 3.59 per cent on last week, to 0.6696. The AUD/RMB rose 0.81 per cent in the week to 4.7194.
Venture Capital
BioScout
Stoic investee BioScout announced deployment of their units across multiple additional sites, as part of a new partnership with Australia’s largest wine company, Treasury Wine Estates. BioScout also revealed that they have been shortlisted for the 2022 Wine Industry Impact Awards, showcasing innovation for sustainable change in viticulture.
Certa
Stoic investee Certa published ground-breaking results for its novel drug FT011, which seeks to treat serious inflammatory and fibrotic disease.
Ferronova
Stoic investee Ferronova welcomed South Australian Minister for Small and Family Business, Consumer and Business Affairs and the Arts, Andrea Michaels, to its UniSA Mawson Lakes campus facilities. Ferronova has benefited from multiple South Australian Government grants, and it is a shareholder via the Artesian (Alternative Investments) managed South Australian Venture Capital Fund. Ferronova also recently completed its first human trial at the Royal Adelaide Hospital.
Property
After a strong outturn last week, auction clearance rates in Sydney reportedly fell back again (to around 60 per cent). In the region of a quarter of homes scheduled for auction were apparently withdrawn. This was taken as a sign that higher interest rates are starting to temper confidence in the market. Housing prices in Sydney are said to have fallen close to 9 per cent this year, to 2019 levels.
Meanwhile, it was also reported that rising borrowing costs are impacting the supply side of property, choking off the development pipeline of apartments over the past three months. In contrast, development of commercial property is said to be showing signs of ‘surprising resilience’.
