6 Dec 2024
Aussie economy weakens further
Markets
- Local and global stocks trended higher this week as investors read US jobs data as unlikely to derail a Fed rate cut in the coming weeks.
- In local stock news, gold miner Northern Star announced a takeover offer for their smaller peer De Gray Mining, in an all-shares transaction at a 37% premium. The offer values De Grey at $5 billion. Northern Star shares fell whilst De Gray shares rose.
- Telstra shares rose after the mobile operator announced it will acquire youth brand Boost Mobile for an undisclosed sum.
- Metcash shares rose strongly following the IGA supplier delivering better-than-expected half-year earnings.
- Rare earths miner Lynas’ shares rose strongly after China announced a ban on rare mineral exports to the US, in retaliation to new US moves.
Economics
- Australian economic growth rose by 0.3% in the September quarter and 0.8% on the year, as reported by the ABS. Household spending was flat and public investment up. Business investment fell. Effectively, the Australian economy is the Australian government right now.
- The Australian current account deficit narrowed to $14.1 billion in the September quarter, with the terms of trade falling by 2.5% to be 3.9% lower through the year. Public demand rose by 2.4% in the quarter, an incredibly large number.
- Australian home prices rose by just 0.1% across the eight capital cities in November, according to CoreLogic. It was the weakest result since prices fell in January 2023. A lift in listings and moderating sales the cause. Sydney and Melbourne were both down, whilst Perth, Adelaide, and Brisbane rose.
- Australian company profits fell by 3.9% in the September quarter, led lower again by the mining sector. Wage bills rose by 1.2%, which saw the annual rate fall to 4%. Cumulatively, company profits have fallen by almost 17% from their peaks in early 2023.
- Australian building approvals rose by 4.2% in October and 6.1% throughout the year, confirming an upward trend.
- Australian retail trade recorded solid growth of 0.6% in October, which saw the annual rate of growth move up to 3.4%. Spending on other retailing and household goods were the drivers in the month, with increased October discounting assisting.
- A key US central bank member said that he was leaning toward supporting a rate cut at the bank’s meeting in two weeks, based on recent economic data.
- US job openings rose from 7.37 million to 7.74 million in October, coming in ahead of expectations. Private sector employment rose by 146,000 in November, coming in ahead of expectations.
- A key Eurozone manufacturing index sank further into contractionary territory in November.
- The Bank of Japan governor said economic data is on track to give them the green light on their next rate hike. However, he continued to express caution on the timing of a such move, citing a focus on domestic wage trends and the political & economic situation in the US.
- China manufacturing edged higher in November, marking the second straight month in expansionary territory. Tentative signs of a recovery since the stimulus announcements. Output and new orders growth showed some pickup whilst export declines narrowed. Input prices swung back to declines while output prices fell at a faster pace. Construction was a drag.
- India’s third-quarter economic growth grew 5.4% on the same time last year, the slowest growth in seven quarters and well below consensus. The miss was due to a significantly smaller expansion in manufacturing versus the previous quarter. New calls for rate cuts from the RBI.
- New Zealand mortgage arrears continue to rise, up 10% in October on the same time last year. Consumer arrears were up 3.1% in the same period, bringing the arrears rate up to 12.14%.
Politics
- Chinese restrictions on meat exports from Australia have been lifted, continuing the warming relations between the two countries. It follows the removal of restrictions on other Australian exports including barely, wine, and coal.
- The French government has collapsed after a vote of no-confidence motion from both left and right-wing parties against Prime Minister Michel Barnier. Not entirely a surprise given how dysfunctional parliament has been since the election earlier this year.
- According to reports, the US will launch its third crackdown in three years on China’s semiconductor industry, curbing exports to 140 companies.
- In response, China has said it will ban exports of “dual use” items related to gallium, germanium, antimony and superhard materials to the US with immediate effect.
- In a social media post, US President-elect Donald Trump threatened 100% tariffs on BRICS nations if they attempt to create a new BRICS currency or back an alternative to replace the US dollar. Trump also dialled down tariff rhetoric against Mexico and Canada after productive meetings with the leaders of both countries.
- The South Korean President declared martial law in a shock move, immediately pitting security forces against parliament and the people. He stated the move was to safeguard a liberal South Korea from the threats posed by North Korea’s communist forces and to eliminate anti-state elements. He lifted the order not long after, following parliament unanimously voting for its end and telling the President to either resign or be impeached.
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