MARKETS
- Local and global equity markets mostly fell this week on new US inflation concerns,
rising oil prices, and continued Chinese economic weakness. - In local stock news, Origin Energy shares fell as the NSW government announced it
would enter talks with the company about extending the life of its coal-fired Eraring
Power Station beyond its planned closure date of 2025. Securing base load power
supply is incredibly important in relation to reliability and cost of living. - Coal miners saw their share prices fall following the NSW Government’s plans to hike
royalties to raise $2.7 billion. Higher royalties usually result in higher prices and/or less
supply. - Macquarie shares fell as the diversified financial released its first quarter update
noting lower investment related income from green energy investments. The company
expects more asset realisations (sales) in the second half. - Alan Joyce has stepped down early as head of Qantas, bringing forward his departure
by two months, handing the reigns to current CFO Vanessa Hudson. The change in plans
came after severe government and public scrutiny and anger continued to intensify. - Global oil prices rose to their highest levels since November 2022 after the Saudis and
Russians extended their voluntary supply cuts to the end of the year. - The Aussie dollar showed further weakness this week falling to US63c amid continuing
China economic concerns and renewed support for the US dollar on the economy’s
resiliency.
ECONOMICS - The RBA left rates on hold at 4.10% at their September meeting as expected in the last
meeting for Governor Lowe before he hands the mantle over to Michele Bullock. Little
to no change in the accompanying statement, which sets the stage for Bullock to set her
own path. - Australian company profits fell by 11.7% in the June quarter and are 5.3% lower over
- the year. Wages and salaries rose by 1.8% in the quarter and are almost 10% higher over
- the year. Inventories fell by 1.9% in the quarter, which will meaningfully detract from
- economic growth in the quarter.
- The Australian economy grew by 0.4% in the June quarter, to be up 2.1% on a year ago
levels. A decent result made to look better by population growth and the external and
public sectors. Housing interest costs lifted another 10.9% in the quarter whilst tax
payable also rose. Real (after inflation) household disposable income is now negative
3.6%, whilst labour productivity worsened again and is now back at 2016 levels. - Australian home prices rose by 1% across the eight capital cities in August, with
Brisbane, Adelaide, and Sydney all recording growth above 1%. The value of new
Australian home loans declined by 1.2% in July to be 14.1% lower through the year. - Australia’s current account surplus narrowed to $7.7 billion in the second quarter,
with the trade surplus narrowing by a large $8 billion. The result was a fall in the terms
of trade by 7.9%. - The US unemployment rate jumped to 3.8% in August, against expectations for it to
remain steady at 3.5%. Average hourly earnings rose 4.3% in August versus the same
time last year, but less than in July and lower than forecast. - US non-farm employment data came in higher than expected with the report
suggesting that labour market demand is still high. - The US economy’s services sector expanded for an eighth consecutive month in August
beating expectations. Employment, prices, and new orders all jumped from the prior
month. - A Eurozone manufacturing production index rose in August, coming in slightly below
expectations. Manufacturing in the region remains in contractionary territory. The
equivalent services index sank into contractionary territory whilst also coming in below
expectations. - UK retail sales increased 4.1% in August in contrast to a 1% rise in the same period last
year. Consumer credit and debit card spending gains slowed in August, whilst a key
services gauge contracted in August to the lowest level since January. - India reported strong economic growth, growing at 7.8% for the three months from
April to June, marking the quickest pace in a year. In addition, Indian manufacturing
activity gained momentum in August rising to a three-month high. - A private gauge of China’s factory activity moved into expansion in August due to
improved supply and market demand, whilst official Chinese manufacturing data came
in stronger than expected to be in expansionary territory. - A key Chinese service sector activity indicator showed a notable decline in August,
suggesting that activity has continued to improve but at a slower pace. - Chinese trade data showed exports declined by 8.8% in August with continued
weakness in global trade. - The Chinese government continues to release stimulus measures with the central bank
now trimming the amount of foreign currency deposits banks are required to hold as
reserves. The latest comes after fresh stimulus for the property sector and plans to
expand tax breaks for child & parental care and education.
POLITICS - Australian PM Anthony Albanese will visit Beijing to meet senior leaders before the
end of 2023, in the latest sign of warming relations. - China’s share of US good imports fell to the lowest level since 2006 in the twelve
months through July, as the US continues to redirect production and imports away from
China. Countries like Mexico and Vietnam have benefited from the shift. - The Chinese government moved to expand the ban on the use of Apple iPhones in
sensitive departments to include government-backed agencies and state companies,
moving beyond the initial ban for government officials. A tit-for-tat move to root out
foreign technology use in sensitive environments just like the West has done for Chinese
technology.
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