Markets
Local and global equity markets saw weakness this week with the US technology-heavy NASDAQ index experiencing its biggest one day fall since 2022 as quarterly reporting season got off to a shaky start.
In local stock news, Woodside Energy shares fell after Australia’s largest oil and gas producer said it would be spending $1.4 billion to acquire a US company with a fully permitted LNG project under development. The company also undershot market forecasts for second quarter production volumes.
Macquarie Group said their profit was boosted by an uptick in its key commodities and global markets business, supported by increased trading activity in north American gas and power. First quarter results were in line with expectations and broadly in line with a year ago.
South32 shares fell sharply to a four-month low after the BHP spin-off missed 2023/24 production guidance for alumina and copper, while revising downward production targets for 2024/25.
Lynas Corp shares dipped after the company reported sales revenue for the quarter of $136.6 million, up from $101.2 million last quarter. Their Mt Weld expansion is expected to be completed by end of September.
Transurban shares edged higher after the company announced it had progressed to the next stage with the Queensland government for widening the western section of its Logan Motorway project in Brisbane.
Copper futures, which surged in price earlier this year on the A.I. thematic, retreated for the seventh day in a row this week. This the metal’s longest losing streak since February 2020. Copper pricing is generally used as a barometer for future economic conditions.
Australian dollar weakness continued with investors focused on weakening commodity prices and Chinese economic weakness.
Economic
Australian consumer sentiment shot up to a six-month high as households reported more confidence in their finances, possibly assisted by stage three tax cuts.
Business activity in Australia’s private sector neared stagnation in July, based on a key index, with new orders declining for a second month in a row.
The US economy expanded at a 2.8% annualised pace in the June quarter, coming in above expectations.
A key US inflation index, closely followed by the Fed, showed prices rose at a 2.9% rate in the quarter, down from 3.7% in the March quarter.
US existing home sales fell 5.4% in June to 3.89 million, the lowest level since December. New home sales fell 0.6% in June.
A key US economic activity index fell further in July, coming in well below expectations. Durable goods orders slid 6.6% in June, coming in well below expectations.
The share of US credit card balances past due reached a 12-year high, with 2.6% of balances now 60 days past due in the first quarter. This is more than double 2021 levels.
A European central bank policymaker opened the door to two more interest rate cuts by the end of the year, if data permitted.
The Bank of Canada cut interest rates again as broadly expected by the market in a move to relieve tight financial conditions as their economy continues to weaken.
The central bank of China cut a key short-term policy rate for the first time in almost a year as part of measures to step up support for the economy. The move aims to increase liquidity and increase financial support for the economy.
China’s Third Plenum communique offered little additional insights into how it will further stabilise the economy.
India will spend US$24 billion in job-creating efforts over the next five years and boost rural spending, as unveiled by their finance minister in the 2024/25 budget.
Politics
US President Biden announced he was dropping out of the 2024 presidential race, bowing to pressure from within his party and donors, but will serve out his term. He endorsed Vice President Kamala Harris to replace him. She will now go through a selection process before or at the Democrat party convention in August.
Chinese President Xi Jinping indicated plans to assist the finances of China’s indebted local governments. Plans centre around shifting more revenue from central to local government.
Israeli fighter jets struck an oil port in Yemen in retaliation for a drone attack in Tel Aviv, risking broadening of the conflict.
Semiconductors and other restricted goods shipped through China and Hong Kong to Russia fell by 20% this year, as disclosed by US Commerce Department data.
The Australian securities and investment regulator ASIC is now focusing on the private credit sector’s lack of disclosure and opaque nature.
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