Stoic Asset Management: Market update: 2 August 2023
Economic and market news
The Reserve Bank of Australia left the official policy rate unchanged at its meeting on Tuesday, for the second consecutive month. It noted again that the full impact of the 4 percentage points of increase in interest rates thus far is still feeding through, and it will take time and more data to assess the extent that more tightening is required. It highlighted in particular though that goods inflation is easing, but that services inflation is still strong.
Alongside this, new official data show that inflation had eased to 0.8 per cent in the June 2023 quarter and 6.0 per cent annually. This figure was down from 7 per cent in the March quarter, and slower than expected by markets (6.2 per cent). The quarterly outturn was the lowest since September 2021. The softening in price pressure was said to be down to consumer goods such as furniture, appliances and clothes.
In overseas news, there were further announcements by the Chinese Government about economic stimulus measures. These focused on increasing consumption, including of cars, property, electronic products, and holidays. However, commentators felt that the package still falls short of what is needed to boost the economy to grow at the 5 per cent target this year.
Elsewhere, official interest rates in the United States were raised by another 0.25 percentage points, to the highest level in 22 years. Commentators suggested thatthis may now be the peak, and discussion has moved to how long they will remain at this level. In addition, it was reported that the Federal Reserve is no longer predicting a recession in the US.
Supporting this forecast, new data show that economic growth accelerated in the second quarter, reaching 2.4 per cent compared to 2 per cent in the three months to end-March. This was said to be despite a slowing in inflation from 1.9 per cent from 3.8 per cent in the corresponding periods.
The growth impulse was reportedly broad-based and commentators suggested that the unexpected strength in the economy was down to a resilient labour market which has supported consumer spending, while businesses boosted investment in equipment and built more factories.
Meanwhile, the ECB tightened monetary policy for the ninth consecutive time. However, there was speculation that a looming recession may mean this is the peak in the interest rate cycle in Europe.
Australian indices
ASX 200: Rose 1.51 per cent over the week, to close at 7450.7 points on Tuesday.
All Ordinaries: Also rose, 1.44 per cent, in the week, closing at 7663.7 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
|
92.22 |
3.81% |
-12 |
-40 |
+139 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
95.27 |
3.74% |
-11 |
-21 |
+96 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
91.83 |
3.97% |
-9 |
-5 |
+92 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.12 |
4.18% |
-9 |
-5 |
+92 |
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 (1 August 2023) |
+0.25 (6 June 2023) |
1.85 |
Currencies (source:RBA)
As at the close on 1 August, the AUD/USD had fallen further, 1.40 per cent in the week, to 0.6673. The AUD/RMB had also fallen, 1.09 per cent in the period, closing at 4.7823 on Tuesday.
Venture Capital
Cardihab
Stoic investee Cardihab has announced a new partnership with the Australian Centre for Heart Health, to support the mental health of patients that have suffered a cardiac event.
WhiteRabbit.ai
Stoic investee WhiteRabit.ai shared newsabout its new partnership with CharmHealth and Bioverge, which will support access to the ‘My Diabetes Tutor’ and support diabetes education for 37 million Americans
Property
It wasreported that Sydney house prices grew by 5.3 per cent in the June quarter, more than four times as fast as the previous three months. House prices increased across all capital cities, lifting the combined capitals’ growth by 2.7 per cent, which is also nearly four times faster than the March quarter.
However, it was also suggested this week that the rate of growth may have peaked in Sydney, after house prices grew by 0.9 per cent in July, the second month of deceleration, and the slowest pace of growth since the pick-up in February.
