1 Nov 2024
Aussie inflation not weakening enough
Markets
- Local and global stocks fell this week with US stocks coming under pressure as technology giants warned of rising costs for AI.
- In local stock news, Newmont shares fell to a two and half month low after the goldminer reported higher production costs.
- ResMed shares rose strongly to a three-year high after the sleep apnoea device maker announced its first-quarter revenue was up 11% to US$1.2 billion.
- BHP shares gained as the company reached a settlement with authorities in Brazil over the Samarco dam failure in 2015, agreeing to pay $45 billion in reparations for the disaster. The outcome was in line with the money BHP had set aside to meet their potential obligations.
- Mineral Resources said their review was ongoing into undeclared payments made to companies linked to founder and CEO Chris Ellison, who has made clear the payments pre-dated the company’s 2006 listing.
- In other Mineral Resources news, shares rose strongly after the company announced the sale of their gas exploration permits to Gina Rinehart’s Hancock Prospecting for up $1.1 billion. The sale unlocks capital for Mineral Resources to assist with their debt load.
- Macquarie Group’s half-year results fell short of market expectations as trading activity waned in its core commodity and global markets business. Net income for the six months ending 30 September rose to $1.61 billion.
- Oil prices rose on potentially stronger US fuel demand, the potential for OPEC+ to delay their planned output increase in December, and a report claiming that Iran is preparing to attack Israel from Iraqi territory.
Economics
- Australian headline inflation rose by 0.2% in the September quarter with the annual rate dipping to 2.8%. The critical trimmed mean measure increased by 0.8% in the quarter which saw the annual rate ease to 3.5%, still above the RBA’s target band. No rate cuts this year.
- Australian building approvals rose by 4.4% in September, the highest level since May 2023. Private sector houses rose by 2.2% in the month to be 16.7% higher through the year, whilst multi-unit dwelling approvals rose by 4.7% in the month but remained 12.2% lower through the year.
- Australian export prices fell by 4.3% whilst import prices fell by 1.4% in the September quarter, pointing to a further fall in the terms of trade (detracting from economic growth).
- Private sector credit in Australia rose by 0.5% in September to be 5.8% higher through the year. Investor credit growth continues to rise with business credit growth remaining solid.
- Australian retail trade rose by just 0.1% in price terms in September to be 2.3% higher over the year. In volume terms, retail trade rose by 0.5% in the quarter but just 0.2% for the year, despite strong population growth. A weak reading.
- CoreLogic data showed Australian dwelling prices rose by 0.2% on aggregate across the eight capital cities in October. Prices in Sydney declined for the first time since January 2023.
- US economic growth expanded by 2.8% in the September quarter, coming in slightly below expectations.
- The US central bank’s preferred inflation gauge rose 0.3% in October and 2.7% for the year, coming in above expectations.
- US personal income rose 0.3% in September, meeting expectations, with personal spending up 0.5%, slightly ahead of expectations.
- Data showed that US consumer sentiment climbed to a six-month high in October with the uptick most pronounced among Republicans who grew more confident in a Trump victory. A key US consumer confidence index also rose strongly in October.
- A key US manufacturing index rose in October, coming in well ahead of expectations, but remained in contractionary territory.
- US job openings fell in September, coming in below expectations and slipping to their lowest level since January 2021.
- US pending home sales rose by 7.4% in September which was well above expectations.
- Britain’s new finance minister announced the biggest tax increases in three decades in her first budget, raising taxes by 40 billion pounds a year.
- The Chinese economy is showing some very early signs of recovery with factory activity unexpectedly expanding in October whilst the official manufacturing index rose. However, industry profits data remained weak.
Politics
- Prime Minister Anthony Albanese came under pressure to explain his relationship with Qantas after allegations he received more than a dozen free flight upgrades, with claims he solicited at least some of them directly from ex-CEO Allan Joyce. The PM has refuted the claims.
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