Economic and market news
The Reserve Bank of Australia yesterday decided to hold official interest rates steady at 4.35 per cent, despite the ongoing ‘stickiness’ of inflation. The statement announcing the decision acknowledged that inflation is declining more slowly than anticipated, largely because of high services inflation off the back off wage growth in a still tight labour market, and higher petrol prices because of ongoing geopolitical tensions. Alongside the decision, the RBA published new economic forecasts, in which it upgraded its near-term expectations for annual inflation to 3.8 per cent, above the 3.6 per cent recorded in the data for March.
At the media conference after the decision, the Governor indicated that the Board had discussed the possibility of a tightening of monetary policy.
New data show that consumers are continuing to tighten their belts. Australian retail turnover fell 0.4 per cent (seasonally adjusted) in March 2024. This followed a rise of 0.2 per cent in February 2024 and a rise of 1.0 per cent in January 2024.
Underlying retail turnover has now been flat for the past six months and was up only 0.8 per cent compared to March 2023. Outside of the pandemic period and introduction of the GST (in 2000), this is the weakest year on year growth on record.
In other news this week, markets were boosted by comments by the US Federal Reserve Chair that a rate rise is ‘unlikely’ even though inflation is proving sticky. This was despite the fact that he also made clear that a rate cut in the near term is also not expected.
Australian indices
ASX 200: Rose 1.69 per cent over the week to close at 7793.3 points on Tuesday.
All Ordinaries: Rose 1.68 per cent in the period, closing at 8065.5 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
|
100.50 |
3.98% |
-10 |
+24 |
+90 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
96.75 |
3.97% |
-10 |
+23 |
+95 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
95.52 |
4.30% |
-7 |
+21 |
+99 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
86.32 |
4.50% |
-7 |
+20 |
+80 |
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 7 May the AUD/USD was up 1.15 per cent over the week, closing at 0.6600 on Tuesday. The AUD/RMB was up 0.78 per cent, in the period, closing at 4.7634 on Tuesday.
Venture Capital
Morse Micro
CEO of Stoic investee Morse Micro, Michael De Nil, talked more about the new office in Taiwan. He highlighted that this expansion underscores its dedication to meeting the evolving needs of customers in Taiwan and China, and enhance collaboration, allow it to better understand their needs, and to continue to innovate.
Property
This week’s data on the residential property market showed another increase in auction clearance rates, this was despite a 10 per cent rise in auction numbers. Real estate agents also reported high bidder numbers at auctions. The preliminary clearance rate across the capital cities was 73.5 per cent, up from 72.9 per cent last week.
