Economic and market news
In economic news this week, inflation 'surged' to 4 per cent in the year to end-May, from 3.6 per cent at the end of April. This was taken by the markets and commentators as significantly increasing the possibility that the Reserve Bank of Australia might raise interest rates again, potentially as soon as August.
However, it was noted that CPI inflation is often impacted by items with volatile price changes. The measure of underlying inflation, fell in May to 4.0 per cent, from 4.1 per cent in April.
Alongside this, the minutes of the Reserve Bank of Australia's June board meeting show that there was consideration of an official interest rate rise. However, it was decided that it is still possible that inflation will return to the 2-3 per cent target range without further policy tightening and its likely associated increase in unemployment. That said, policymakers highlighted that they consider that ‘narrow path is growing narrower’.
In overseas news this week, economic growth in United States for Q1 2024 has reportedly been revised up slightly to 1.4 per cent. However, this outturn remains the slowest quarterly growth since spring 2022, and a sharp pullback from a strong 3.4 per cent pace during the final three months of 2023. The declaration was caused mainly by a two key volatile activities, a surge in imports and a drop in business inventories.
In China new data suggest that measures by the Government to slow the decline in the housing market have had some immediate impact. The value of new home sales from the 100 biggest real estate companies dropped 17 per cent from a year earlier to 439 billion yuan ($90.5 billion), compared with a 34 per cent decline in May. Sales volumes also jumped 36 per cent from May.
Australian indices
ASX 200: Fell 1.54 per cent over the week to close at 7718.2 points on Tuesday.
All Ordinaries: Once again failed to make the 8000 mark stick, falling 1.45 per cent in the period to close at 7959.7 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 |
4.25
|
100.06 |
4.21% |
+1 |
+9 |
0 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
96.16 |
4.13% |
+1 |
+4 |
+19 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
94.76 |
4.41% |
+3 |
+0 |
+39 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
85.40 |
4.60% |
+3 |
+1 |
+37 |
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 (18 June 2024 ) |
+0.25 (7 November 2023) |
4.10 |
Currencies (source:RBA)
As at the close on 2 July the AUD/USD had fallen 0.27 per cent over the week, closing at 0.6646 on Tuesday. The AUD/RMB had also fallen, 0.13 per cent, in the period, closing at 4.8324 on Tuesday.
Venture Capital
Lenexa Medical
Stoic investee Lenexa Medical announced that it has secured a $50,000 MedTech Market Growth Program Grant from LaunchVic and the Department of Jobs, Skills, Industry and Regions.
It said that the grant will help in manufacturing more product, and providing personalised aid to additional healthcare facilities in the prevention of pressure injuries.
Property
In property news this week, data show that both auction volumes and clearance rates fell last week. There were 2,001 auctions held nationwide, this was down from 2,150 the week prior but 458 auctions more than at the same time last year (1,543). The clearance rate dropped significant (down 2.4 percentage points) to 70 per cent.
In other property news, it was reported that construction costs are 37 per cent higher than four years ago. After steadily falling from mid-2022 to mid-2023, inflation in the cost of building a new home is now holding at 5 per cent, due in part to a substantial pipeline of state government infrastructure projects putting upward pressure on building material and labour costs. Building costs have increased 37 per cent cumulatively since the onset of the pandemic, and are a major driver of high CPI inflation.
