Economic and market news
In Australian economic news, the Federal Government released its latest periodic Intergenerational Report. This document and forecasts looks at long term trends in the economy. Of particular focus in the commentary were suggestions that costs of climate change and the ageing population will lead to 40 years of budget deficits. As such, there were calls for serious reform to rebalance the tax system away from income tax, reliant on an every smaller proportion of the population in the work force, towards other taxes such as a broader and higher rate of consumption tax.
Retail sales figures were unexpectedly strong for July. The 0.5 percentage point increase in the month was said to have beaten expectations of a 0.2 percentage point increase, after a sharp fall (-0.8) in June. The increase was ascribed in part to ‘one off’ spending on eating out and take away food during Australia’s successful hosting of, and participation in, the 2023 FIFA Women’s World Cup.
In overseas news, there were reports on the latest measures by the Chinese government to boost consumption and grow its economy. However, it was noted that there is reticence to use the amounts of monetary and fiscal stimulus implemented during past downturns, or the cash handouts to consumers that fuelled post-pandemic recoveries in the US and elsewhere.
Australian indices
ASX 200: Rose this week, by 1.25 per cent, to close at 7210.5 points on Tuesday.
All Ordinaries: Also rose, 0.95 per cent, closing at 7416.4 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
|
92.34 |
3.88% |
-2 |
-6 |
+79 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
94.73 |
3.87% |
-4 |
+0 |
+42 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
90.89 |
4.10% |
-4 |
+3 |
+43 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
87.53 |
4.34% |
-3 |
+6 |
+49 |
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 29 August, the AUD/USD had risen very slightly this week, 0.45 per cent, to 0.6446. The AUD/RMB also rose marginally, 0.46 per cent in the period, closing at 4.6986 on Tuesday.
Venture Capital
Ferronova
Stoic investee Ferronova has announced the signing of a licensing agreement with the Purdue Research Foundation. This will combine patented technologies that will be applied in MRI targeted radiotherapy of cancers such as glioblastoma, prostate cancer, and pancreatic cancer.
Property
Commentators this week have suggested there are concerns that a lengthy period of relatively high and stable interest rates will cause a crisis in global commercial real estate markets. These fears were said to have been heightened by the current crisis at WeWork. The commercial property market has historically been a sector vulnerable to monetary policy tightening cycles, given its tendency to highly gear. Post-pandemic vacancy rates for office space are exacerbating the financial risks in the sector.
New data show that residential rents fell in 20 per cent of all suburbs nationwide in the past three months, and by as much as 6 per cent.
