14 Feb 2025
Early Russia / Ukraine peace hopes
Markets
- Local and global equity markets rose this week benefiting from peace hopes in Europe, strong fourth-quarter US company earnings, and a surge in Chinese technology names.
- In local stock news, Wisetech Global shares fell after the company’s board said it was considering two new complaints against its founding CEO Richard White, who recently shifted to a full-time consultancy role with the company following previous indiscretions.
- JB Hi-Fi shares fell after the consumer electronics and homewares retailer reported sales growth had moderated in January climbing 9.8% in the six months to December 31.
- CSL shares fell to a more than one-year low after the company released its first-half results which missed market expectations across a range of metrics. The company said it was a solid result, with the US blood and iron divisions performing well, while noting a drop in influenza immunisation rates in the US.
- Nine Entertainment shares soared 14% to a six-month high after a report indicated billionaire Bruce Gordon was looking to increase his holding in Nine.
- CBA generated more than $5 billion in cash profit in the six months through to the end of 2024, in line with expectations, with shares rising to an all-time high. Their CEO warned that economic conditions in Australia remain fragile with weak private sector growth, slowing immigration and geopolitical uncertainties.
- Suncorp shares rose after the insurance company announced it made $860 million in cash earnings in the six months to end of December, up from $660 million a year ago.
- Computershare shares soared to an all-time high after the share registry platform hiked its dividend by 12.5% while raising guidance.
- A confusing set of currency moves with the Aussie dollar rising whilst the US dollar fell, as the RBA nears their first likely rate cut whilst traders pare back US rate cut expectations for this year. News of peace hopes between Russia and Ukraine may have had an impact here.
Economics
- The Westpac-Melbourne Institute consumer confidence survey found sentiment was largely unchanged this month, with a very small 0.1% gain. Confidence remains in pessimistic territory. Sentiment had improved over the second half of 2024 but has stalled in the last three months with pressure on family finances.
- Australian business confidence rose in January, but conditions fell below long-term average levels. Output price growth was largely unchanged while growth in input costs eased.
- The value of new housing lending in Australia rose by a more modest 1.4% in the December quarter, with the annual rate dropping to 16%. Lending to investors was 2.9% lower in the quarter, whilst lending to owner occupiers rose 4.2% and is responsible for most of the year’s growth.
- US non-farm payrolls came in lower than expected but the unemployment rate fell to 4%, the lowest level since May 2024, with a higher participation rate assisting and upward revisions to previous jobs data.
- US central bank chair Jerome Powell said the bank was in no rush to cut rates given the US economy was strong overall with low unemployment and inflation still above target. Bond traders have now pushed out bets for the next US Fed rate cut to December.
- January US inflation data came in at the high end of expectations, rising 0.5% in January. The annual growth rate lifted from 2.9% to 3%. The core measure rose 0.4% in January, with annual core inflation lifting from 3.2% to 3.3%.
- India’s central bank voted unanimously to cut its interest rates by 0.25% to 6.25% as expected. Their governor said the economic backdrop remained challenging, with the Indian economy not immune to global uncertainties, volatile financial markets and trade uncertainties.
- Indian inflation in January eased to a five-month low of 4.31%, coming in below expectations, with food inflation dropping significantly from its previous reading. Core inflation nudged up but remained below the Reserve Bank of India’s target.
- China inflation data was mixed with consumer price inflation rising 0.5% in January, slightly above expectations, making the highest monthly print since February 2024. Core inflation strengthened to 0.6% with Lunar New Year holiday factors contributing.
Politics
- Newly confirmed US Defence Secretary Pete Hegseth reiterated support for the AUKUS security pact, where the US and the UK will supply a fleet of nuclear-powered submarines to Australia.
- Baltic states disconnected from Russia’s electricity grid and connected to continental Europe’s network. The move came after a five-year effort helped by 1.6 billion Euros in EU funding.
- US President Trump has introduced new 25% tariffs on all steel and aluminium imports in the US, which will impact Australia. He also announced matching reciprocal tariffs will apply to any country that levies a tariff back at the US. No exemptions for trading partners for now.
- US President Trump and Russian President Putin will start negotiating towards ending the war in Ukraine. Ukrainian President Zelensky has been notified that a US convoy is on its way to start negotiations.
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