Economic and market news
The Reserve Bank of Australia decided on Tuesday to raise its official policy rate by 0.25 percentage points to 3.35 per cent. The ninth consecutive rate rise since May 2021. Immediate commentary on the decision noted the suggestion that more increases would be necessary to ‘tame inflation’. The Governor indicated that new economic forecasts out later this week would show the economy slowing to 1.5 per cent this year, in line with the RBA’s expectations back in November 2022.
In overseas economic news, the US Federal Reserve slowed the pace of its monetary policy tightening, lifting its policy rate by 0.25 percentage points (to a range of 4.5 to 4.75 per cent). However, it suggested that there are a ‘couple more’ rises to come, and that policy would need to be restrictive for ‘some time’ and for there to be ‘substantially more’ evidence’ in order to be confident inflation is on track to return to target.
Alongside this, an unexpected ‘surge’ in US jobs was said to have ‘checked’ the rally in stock markets, amid concerns that labour market tightness (and hence wage rises) would support ongoing monetary policy tightening.
The Bank of England raised its benchmark rate to 4 per cent, the highest level since 2008. Alongside this, it issued forecasts that suggested a significant deceleration in inflation this year (from 11.1 to 4 per cent), which was taken by the market to be a signal that the policy tightening cycle could be ‘drawing to a close’. However, on the prospects for inflation and the economy, the Governor was quoted as saying that ‘We have seen a turning of the corner, but it is very early days, and the risks are very large’.
The inflation outlook is also thought to be improving in Europe, as ‘energy prices plunge’. The ECB raised its policy rate by 0.5 per cent last week. However, in contrast to the Bank of England, it signalled that there would likely make a similar jump at its meeting in March, before re-evaluating its policy path.
Australian indices
ASX 200: Rose 0.37 per cent, in the week, to 7504.1 at the close on Tuesday.
All Ordinaries: Rose 0.35 per cent in the week, closing at 7713.1 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
|
100.05 |
3.22% |
+15 |
-18 |
+222 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.25 |
94.70 |
3.35% |
+15 |
-25 |
+164 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
4.50 |
107.65 |
3.59% |
+14 |
-23 |
+159 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
92.16 |
3.88% |
+10 |
-22 |
+166 |
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) |
|
3.35 |
+0.25 (7 February 2023) |
+0.25 (7 February 2023) |
0.10 |
Currencies(source:RBA)
As at the close on 7 February, the AUD/USD had fallen 1.51 per cent in the week to 0.6931. The AUD/RMB had fallen 1.08 per cent in the same period, to 4.7032.
Venture Capital
A new report has been published into the State of Australian Startup Funding in 2022. It sets out how the environment changed in Australia last year, in direction and themes, and how that compared to the experience overseas.
BioScout
Stoic investee BioScout announced that its disease detection units have arrived in New Zealand!
Certa Therapeutics
Stoic investee Certa Therapeutics has announced ground-breaking results in a clinical trial of FT011, its novel therapy for the treatment of serious inflammatory and fibrotic diseases.
Data from Certa’s Phase 2 clinical trial of development candidate FT011 demonstrates clinically meaningful improvements for more than 60 percent of patients with scleroderma after 12 weeks of treatment. This sets the drug on a path to Phase 3 trials.
ENA Respiratory
Stoic investee ENA Respiratory shared the results of a recent patient survey by the COPD Foundation thatrevealed people with lung disease are extremely positive about taking an immune-modulating nasal spray like INNA-051 to reduce exacerbations during cold and flu season.
Morse Micro
Stoic investee has come out of the blocks in 2023 at pace announcing new partnerships and use cases for its Wi-fi HaLow.
Property
New evidence was reported that shows that the housing ‘slumps’ in the US and China are continuing, and that the UK is now experiencing the worst ‘losing streak’ since 2008. Commentators suggested that the consumer confidence impact of these conditions could have a significant impact on consumer spending, and coupled with ongoing interest rate rises, poses a risk to the global economy.
