Economic and market news
In Australia, the Reserve Bank of Australia decided to increase the official interest rate for a twelfth time, to 4.1 per cent. The Bank stated that inflation pressures in the economy have increased. It noted particularly that services inflation had increased. Also highlighted was the fact that although unemployment has increased slightly and employment growth slowed, the labour market remains very tight and recent wage increases, including those that are legislated, have been higher than last year. The Governor’s statement indicated that more rate rises are likely to be required.
Commentators were generally supportive of the RBA’s decision, with many calling out the Federal Government on its role in stoking inflation, in conflict with the Bank’s efforts, with its budget measures and calls for higher wages.
Alongside this, new inflation data show that price pressures increased in April. Inflation picked up to 6.8 per cent in April (from 6.3 per cent in March). This was attributed to rising rents, a lift in holiday travel costs, and higher transport costs following the unwinding of the temporary cut in the fuel taxes last year. The figures were said to put more pressure on the Reserve Bank of Australia to raise interest rates further, despite signs that the economy is already slowing down.
The Fair Work Commission raised the level of the minimum wage by an historic 8.6 per cent, from 1 July. Business and commentators were united in the opinion that this decision is inconsistent with the Reserve Bank’s attempts to bring down inflation.
Australian indices
ASX 200: Fell again over the week, 1.11 per cent, to close at 7129.6 points on Tuesday.
All Ordinaries: Also fell, 0.91 per cent, in the week, closing at 7319.9 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
|
98.95 |
3.83% |
+8 |
+75 |
+121 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.25 |
93.85 |
3.61% |
+5 |
+59 |
+41 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
4.50 |
105.69 |
3.80% |
+2 |
+48 |
+32 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.97 |
4.10% |
+2 |
+40 |
+44 |
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 |
+0.25 (6 June 2023) |
+0.25 (6 June 2023) |
0.85 |
Currencies (source:RBA)
As at the close on 6 June, the AUD/USD had risen 2.34 per cent in the week, to 0.6661. The AUD/RMB had risen 2.57 per cent in the period, to 4.7373.
Commodities
Worries about the strength of the Chinese economy were said to be behind the slump this week in commodity prices. New data show that China’s manufacturing activity contracted for a second straight month in May, reinforcing concerns that demand for commodities will weaken.
Venture Capital
Forcite
Stoic investee Forcite shared some of the exciting new features that will be in its next generation app when it comes out soon!
Jayride
Stoic investee Jayrdie have announced a new partnership with Flex Travel Solutions.
Lumi
Stoic investee Lumi has won two awards – Best Workplace Diversity, and Emerging Fintech Leader of the Year!
Morse Micro
Stoic investee Morse Micro’s partnership with AzureWave Technologies has opened up new use cases and quicker time to market for IoT-connected devices. The new Wi-Fi HaLow module offers far greater distance and coverage area, as well as lower power energy requirements, leaders of the two companies have told EE Times. And Networking World has talked about how Wi-Fi HaLow is intended to make deploying IoT devices easier by enabling network architects to move lower bandwidth clients off the main Wi-Fi network.
Property
The RBA Governor has attributed high housing costs in Australia to undersupply issues brought about by planning and regulation.
It was reported that house price growth accelerated in May, despite the increase in official interest rates. Prices in every capital city except Darwin recorded an increase and prices in all regional markets rose too, except for regional NSW and regional Victoria, according to new figures.
Alongside this, new data show that home-building has fallen to the lowest level in more than seven years as the industry suffers from record insolvencies, rising costs and delays from material and labour shortages struggles.
The value of residential construction over the four quarters to March fell to $72.6 billion, the lowest total since the June quarter of 2015, when it was $70.8 billion.
