Economic and market news
In Australian economic news, the minutes of the Reserve Bank of Australia's July board meeting showed that the pause in the interest rate cycle was down to concerns about a surge in unemployment. However, commentators suggested that another policy tightening could be on the cards for August as the RBA will have new data on jobs, inflation and growth, and a full set of new forecasts. This is said to be despite evidence of a ‘considerable’ slowdown in the economy.
Separately, the outgoing RBA Governor spoke about the importance of raising productivity for the long term prosperity of the country, and to sustaining low and stable inflation.
In overseas news, data show that inflation in the United States has fallen to 3 per cent in June, from 4 per cent. Within this, core inflation - which removes food and energy prices – fell to 4.8 per cent (from 5.3 per cent), slower than the 5 per cent that economists had forecast. The significant fall in inflation is said to have been driven by lower fuel and used car prices, hotels and airfares. However, markets still expect that there will be at least one more increase in official interest rates.
There remained concerns about the slowdown of the Chinese economy, and the lack of ‘meaningful’ stimulus being undertaken by the government. New data show that the Chinese economy grew by 6.3 per cent in the June quarter, compared with a year ago, missing forecasts of 7.1 per cent. Monthly indicators for June also showed a notable slide in retail sales, to 3.1 per cent year-on-year in June from 12.7 per cent in May, along with a weakening in the property market. While the urban jobless rate was unchanged at 5.2 per cent in June, the youth unemployment rate soared to 21.3 per cent.
Australian indices
ASX 200: Rose over the week, 2.46 per cent, to close at 7283.8 points on Tuesday.
All Ordinaries: Also rose, 2.47 per cent, in the week, closing at 7496.7 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
|
91.83 |
3.94% |
-3 |
+25 |
+128 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
94.76 |
3.84% |
-3 |
-9 |
+67 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
90.80 |
3.97% |
-1 |
-5 |
+54 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.10 |
4.18% |
-1 |
-8 |
+59 |
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 18 July, the AUD/USD had risen 2.08 per cent in the week, to 0.6821. The AUD/RMB had risen 1.65 per cent in the period, closing at 4.8926 on Tuesday.
Commodities
The concerns about the Chinese economy further impacted commodities markets this week, with the iron ore price falling 1.1 per cent on Monday to $US112.60 on a tonne on the July contract, copper led base metals lower on the London Metal Exchange, falling 0.9 per cent to $US8598 a tonne, and global benchmark Brent crude dropped towards $US79 a barrel after losing 1.8 per cent on Friday.
Venture Capital
Forcite
Stoic investee Forcite announced that the first 300 of their MK1S smart helmets are now available to riders in the United States. A huge milestone for the Forcite team.
Morse Micro
Stoic investee Morse Micro has earned a place on the Electronic Engineering Times’ annual Silicon 100 list of ‘Startups Worth Watching’, for 2023. This list comprises of global semiconductor technologies making significant strides in the industry. Morse Micro’s recognition stemmed from its investment and implementation of Wi-Fi HaLow.
Morse Micro also made it onto CRN's '10 hottest start ups'list.
Property
New data show that officevacancy rates in Sydney and Melbourne hit a 12 month high during the final quarter of the 2023 financial year. After falling marginally during the March quarter, the Sydney CBD office vacancy rate rose 70 basis points to 14.4 per cent at the end of June. This is said to have put more downward pressure on commercial real estate values.
