28 Mar 2025
Government calls election
Markets
- Local and global equity markets inched higher this week helped by easing Australian inflation and better than expected US economic growth.
- In local stock news, building materials company James Hardie will buy a maker of outdoor living products (primarily composite decking) in an US$8.8 billion deal. AZEK shareholders will receive cash plus ordinary shares of James Hardie which will see them own circa 26% of the combined company. James Hardie shares have since fallen sharply.
- Shares in Domain fell after the US property giant CoStar sweetened its takeover bid in a best and final offer of $4.43 a share, up 5.5% from the original $4.20 per share. Fair to say the market was expecting a higher bid.
- Oil prices rose as US President Trump said he will impose 25% tariffs on countries that buy oil and gas from Venezuela. This comes on the back of new US sanctions on Iranian exports.
Economics
- Australian headline inflation eased slightly to 2.4% in February, coming in a touch below expectations. The RBA is likely on hold at their upcoming meeting as they await the March quarter inflation read.
- Federal Treasurer Jim Chalmers handed down his fourth national budget which was primed for a looming federal election in trying to address the number one concern of voters, cost of living. The budget deficit remains and worsens again next year with a $35 billion handout in surprise tax cuts and spending.
- Australian manufacturing and services data showed some improvement on stronger new orders and employment, with price pressures continuing to ease as firms are reluctant to pass on cost increases.
- The US economy expanded by a 2.4% annualised rate in the December quarter, coming in above expectations. A robust increase in corporate profits assisted.
- The equivalent data in the US showed a reasonable contraction in manufacturing data, coming in below expectations, whilst the services component surprisingly rose.
- US consumer sentiment data revealed a dip in consumer confidence, with the reading falling to the lowest level since February 2021.
- US 20-city home prices rose in January, broadly in line with expectations. New home sales rose 1.8% in February to an annualised rate of 676,000, coming in just below expectations. Pending home sales rose 2% in February.
- German business sentiment rose in March, in line with expectations, with a key business climate index rising.
- UK consumer prices rose 2.8% in February, coming in below expectations.
- The UK treasurer clawed back $28 billion worth of fiscal room with cuts to welfare and government spending. The move came after a sharp downgrade from the government’s own estimates of the economic growth outlook, halving their expectations.
Politics
- The Australian government rushed through parliament its new round of tax cuts and called an election for May 3. The tax cuts were passed by both the upper and lower houses, with opposition from the Coalition. The tax cuts will cost $17 billion.
- Markets were more settled for most of this week by reports US President Trump’s reciprocal tariffs, due to take effect on April 2, may be more targeted and narrowly based than previously thought, with some countries even being exempt.
- However, the softer tariff news was short-lived with Trump announcing a 25% tariff on all auto imports which will take effect on April 2.
- Canadian Prime Minister Mark Carney called an election for April 28, with polls currently showing a close contest between his Liberal Party and the Conservatives.
- Ukraine and Russia agreed to specific ceasefires regarding the Black Sea and energy infrastructure.
- A plan for CK Hutchison to sell two Panama ports to a BlackRock-led group is moving ahead as scheduled, much to the ire of the Chinese who have controlled much of the Panama Canal for some time. The move comes following pressure from the Trump administration to “reclaim” the Panama Canal.
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