Stoic Asset Management: Market update: 1 March 2023
Economic and market news
In economic news this week, the Australian Bureau of Statistics published the Wages Price Index for the December quarter of 2022. Wages were said to have risen by 0.8 per cent in the quarter, bringing the annual rate of increase to 3.3 per cent. Commentators noted that the annual rate was the fastest in a decade, but fell short of both market expectations and the Reserve Bank’s forecasts.
In the United States, there were reportedly downward revisions to the economic growth figure for the December 2022 quarter. Down to 2.7 per cent from 2.9 per cent. This was said to be because of a revision to consumer spending figures, and was seen as the economy ‘losing steam’. However, it was noted that more recent data suggest that there may have been a rebound in consumer spending at the start of 2023, alongside a ‘startlingly strong job market’. The unemployment rate is at its lowest in more than 53 years.
The UK and EU have come to a milestone agreement on post-Brexit arrangements for Northern Ireland. The deal, once ratified by the parliaments, could unlock some of the ongoing economic issues and business uncertainties that have plagued the UK economy – which was recently dubbed the ‘sick man of Europe’ - since the decision to leave the European trading block.
Australian indices
ASX 200: Fell again this week, 1.06 per cent, to 7258.4 at the close on Tuesday.
All Ordinaries: Also fell again, 1.15 per cent, closing at 7458.0 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 |
3.25
|
99.30 |
3.58% |
-4 |
+47 |
+250 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.25 |
93.29 |
3.67% |
-3 |
+38 |
+183 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
4.50 |
105.40 |
3.85% |
-2 |
+30 |
+171 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.60 |
4.12% |
-1 |
+25 |
+179 |
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) |
|
3.35 |
+0.25 (7 February 2023) |
+0.25 (7 February 2023) |
0.10 |
Currencies (source:RBA)
As at the close on 28 February, the AUD/USD had fallen another 2.41 per cent in the week to 0.66730. The AUD/RMB had also fallen further, 1.46 per cent, in the same period, to 4.6690.
Commodities
It was reported that Chinese production of lithium, which represents a tenth of global supply, has been shut down amid concerns about environmental pollution. The rare earth is a key input into production of things such as electric vehicles, and global demand was said to have surged in recent years.
Venture Capital
Forcite
Stoic investee Forcite announced that its first shipment of 1,800 Forcite MK1S units is on route to the United States. Alongside this, it said that it has already raised $2.4 million in a bridge round to assist in this phase of the US expansion, but that it is excited to invite new investors to participate in the $400K available for investment before the planned Series B round.
Property
There is more evidence that shopping malls are holding their property values in the face of the wider market softening. A Coles supermarket’s development arm has reportedly set a Queensland record with the $27.4 million sale of its Toowoomba (regional Queensland) supermarket and liquor site.
National residential auction clearance rates remained strong this week at 69.7 per cent, only marginally lower than last week’s (70.8 per cent), which was the strongest in a year.
The decision by Australia’s banking regulator, APRA, to maintain the serviceability buffers for mortgage holders, in the face of concerns about an economic slow down, is likely to have headed off an upward pulse in property prices from increased demand.
