May 22, 2024
Economic and market news
In economic and market news this week, it was revealed that unemployment rose in April to 4.1 per cent, from 3.9 per cent in March. However, this increase in the unemployment rate concealed an increase in employment of around 38,000 people. The number of unemployed grew by 30,000 people, but within this there were more people than usual indicating that they had a job that they were waiting to start - the participation rate increased to 66.7 per cent.
There were also new data showing that wages slowed in the three months to end-March, the second consecutive quarter of deceleration. Both public and private sector wage growth slowed in the first three months of the year, but were above the rate experienced in the same quarter of 2023. It was also noted that the WPI annual ‘all sectors’ wage growth has remained at or above 4 per cent since the September quarter of 2023. The last time wages growth was at this level for three consecutive quarters was the March quarter of 2009. Economists predict a further slowing in wage growth as the labour market ‘cools’.
In overseas news, US inflation decelerated to 0.3 per cent in April after posting 0.4 per cent in February and March. The annual rate fell to 3.4 per cent from 3.5 per cent in March. The surprise easing in inflation pressures was said to have boosted market confidence in a September rate cut by the US central Bank.
In other US market news, the Dow Jones Industrial Average index made history by crossing 40,000 points on Friday for first time.
In China, the government has announced a raft of measures aimed at finally tackling the property market crisis. The most significant of these is 300 billion yuan ($62 billion) of funding for state-owned enterprises and local governments to acquire unsold new homes ‘at reasonable prices’ and convert them into affordable housing. Commentators are cautious about whether the package will resolve the issues, but the policy package is considered ‘meaningful’, after a long list of ‘piecemeal efforts’.
Australian indices
ASX 200: Rose 1.62 per cent over the week to close at 7851.7 points on Tuesday.
All Ordinaries: Rose 1.56 per cent in the period, closing at 8120.2 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 |
4.25
|
100.54 |
3.95% |
+2 |
+8 |
+46 |
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
96.96 |
3.93% |
+2 |
+4 |
+59 |
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
95.96 |
4.25% |
+1 |
0 |
+66 |
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
86.88 |
4.44% |
+2 |
0 |
+51 |
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) |
4.35 |
+0 (7 May 2024) |
+0.25 (7 November 2023) |
3.85 |
Currencies (source:RBA)
As at the close on 21 May the AUD/USD was up 0.88 per cent over the week, closing at 0.6658 on Tuesday. The AUD/RMB was up 0.86 per cent, in the period, closing at 4.8181 on Tuesday.
Venture Capital
Exonate
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Property
In property news this week, new data show that the preliminary auction clearance rate has fallen to its lowest level this year. Commentators noted that some of this ‘cooling’ is because to seasonal factors. However, market participants also believe that the slowdown in the economy and related uptick in unemployment, and ‘fading hopes of an early interest rate cut’, are also taking pressure out of the market. This week 71.1 per cent of properties put to auction nationally sold. This was down on last week’s 72.6 per cent figure, but up on the same week last year (70 per cent). There were said to be some signs that the slower market is also having an impact of price pressures.
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