MIAMI, FLORIDA - APRIL 08: Former U.S. President Donald Trump attends UFC 287 at Kaseya Center on April 08, 2023 in Miami, Florida. (Photo by Carmen Mandato/Getty Images)
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At home the memorable moment came via the RBA on Tuesday, when the board threw us a long-awaited oxygen mask and paused their stratospheric run on rates.
After 10 months of taking Aussie borrowers out to the cleaners the board, perhaps with an eye on US uncertainty (after all the last US president just got charged with 30-or-so counts of something) said enough for now.
This, just as CoreLogic reported Sydney’s median weekly rental price had reached $699 and it’s average home is back going for a cool million.
“The country is experiencing the longest stretch of continuous rental price growth on record as house rents rise for the eighth consecutive quarter and unit rents for the seventh,” real estate website Domain observed.
Iron ore spot prices fell again last week to finish at around $US120/t. The last time that happened was in early January. A different era.
The recent fall in iron ore prices can be attributed to both demand concerns and Chinese official intervention, according to CBA’s senior economist Belinda Allen.
The National and Development Reform Commission (NDRC) has been running point in ’23 for Chinese officials hoping to squash prices with another crackdown on ‘misinformation, hoarding and malicious speculation’ that the NDRC says typically boosts the spot price.
“The most recent intervention took place earlier this week with the NDRC urging companies dealing with iron ore futures to analyse the iron market in an objective manner and not exaggerate price increases.
But, while policymaker intervention does weigh on iron ore prices, it still plays a secondary role to China’s steel demand outlook, says Belinda.
“We expect iron ore prices will fall to $US100/t by Q4 2023 as China’s steel demand fades.”
Just as the markets fell on the last trading day before Christmas, they dropped again on the final trading day before the Easter break.
But the plucky ASX still managed a gain over the short four-day week.
The S&P/ASX 200 closed down ~0.3% while the the S&P/ASX Emerging Companies index (XEC) – a benchmark for Australia’s micro-cap companies – fell 0.34%.
Leading the winners was health care up 1.6.% on Thursday.
Good and bad news for gold which managed to breakthrough the psychologically baffling US$2000/oz barrier last week.
The S&P/ASX All Ordinaries Gold Index (ASX:XGD) closed 0.5% higher.
Welcome back to another week of key updates around inflation rates in the United States, the more united China and a still fairly fractious Eurozone.
We’ve got the release of minutes from the latest US Federal Open Market Committee (FOMC) and from the European Central Bank (ECB) meet.
Look out for UK GDP and EU industrial production data if you wish. I won’t be staying up.
US retail sales and mainland China’s trade numbers are probably worth TiVo-ing, or whatever the hell that was.
After the RBA decided to keep interest rates on hold last week, the attention now turns to the incoming data to see if they’ll hike again in May and the first incoming data set is unemployment, giving us a view of the tight labour market, says Josh.
“Last month, unemployment came through at 3.5 per cent, near decade lows and much lower than the RBA would like. The worry for the RBA is a wage spiral that feeds inflation with the jobs market so tight. Data released by the ABS shows that there were more than 430,000 jobs for Aussies at the end of February, putting employees in the driving seat to negotiate pay rises.
“One way the RBA hopes to see unemployment rise is with the 650,000 overseas migrants expected to reach Australia over the next two years. On the one hand, this helps to ease some of the pressures in the labour market, but it will also significantly impact the housing market.”
We’re already in a bit of a housing crisis, Josh says, so further rental price increases could be another arm twister for the RBA.
The most watched number in markets is released on Wednesday, with US inflation expected to decline for the 9th consecutive month.
“Ultimately, inflation is moving in the right direction, but it may not be falling as fast as the Federal Reserve would like.”
Josh says the market is currently pricing in a pause from the Fed on May 3rd when it meets again, but if next week’s inflation number is strong, then that may turn the dial towards another hike.
“Another bump in the road came this week with OPEC’s surprise output cut, which saw a surge in oil prices giving the Fed yet another headache in their fight against inflation. A big worry for the Fed is controlling core inflation, given it has only fallen 1% since its peak in March 2021.”
eToro data has markets expecting core inflation to accelerate again over last week, climbing to 5.6% from 5.5%, whilst headline inflation is expected to fall again thanks to falling energy costs.
With inflation still elevated and plenty of economic uncertainty, Gold is closing in on its 2020 high of around $2,060.
It’s up near 10% in one month, pumped by recession concerns as the world’s largest gold ETF enjoyed over a billion US dollars of inflows over the same time
“Gold also has a huge part to play in Central Bank reserves, and 2023 has seen the strongest start to the year from central banks buying gold for more than a decade, following a record high last year,.
“The outlook for gold topping a new high looks positive, with strong central bank and investor demand. The bounce back of gold prices in 2023 also improves the outlook for local miners such as Newcrest (ASX:NCM) and Northern Star (ASX:NST).
“Higher gold prices mean profits should rise, likely leading to improved dividends for investors,” Josh adds.
The Chinese CPI is due and everyone reckons it’s accelerated notably, but the PPI is expected to stay well in negative territory.
China’s overall trade balance is out on Thursday.
On Thursday, stateside, Wells Fargo (WFC), JPMorgan (JPM), and Citi (C) kick off an exciting season of fessing up for US banks.
Sources: S&P Global, Commsec, Investing.com
TUESDAY
Westpac Consumer Confidence Index
NAB Business Confidence MAR
WEDNESDAY
Building Permits and Private House Approvals
RBA Speak (Bullock)
THURSDAY
Aussie Unemployment Rate
Consumer Inflation Expectations
TUESDAY
US Wholesale Inventories MoM
US Consumer Inflation Expectations
US Fed Williams Speech
US Redbook YoY
JP 5-Year JGB Auction
EU Retail Sales
GB BBA Mortgage
GB BRC Retail Sales Monitor YoY
CN Inflation Rate / PPI
CN Vehicle Sales
CN New Yuan Loans
CN Outstanding Loan Growth
CN Total Social Financing
WEDNESDAY
US Fed Harker Speech
US Fed Kashkari Speech
US API Crude Oil Stock Change APR
JP Bank Lending YoY
JP PPI YoY MAR
US MBA 30-Year Mortgage Rate
US MBA Mortgage Refinance Index APR
US Core Inflation Rate / CPI MAR
GB BoE Gov Bailey Speech
THURSDAY
US Fed FOMC Minutes
US Monthly Budget Statement MAR
US Initial Jobless Claims
UK BoE Gov Bailey Speech
UK GDP MoM FEB
UK Balance of Trade data
CN Balance of Trade MAR
CN Exports / Imports YoY MAR
FRIDAY
US Fedspeak Waller Speech
US Retail Sales MoM MAR
US Import / Export Prices MoM MAR
You can also shoot me now because there’s a new round of earnings reports dropping stateside this week.
For the real horror fans, you’ll have to wait till Thursday when the US banks kick off proper.
Eek.
Tuesday – ING Group (ING), and Albertsons Companies (ACI)
Wednesday – Sportsman’s Warehouse Holdings (SPWH)
Thursday – Delta Air Lines (DAL) and Fastenal (FAST)
Friday – BlackRock (BLK), Wells Fargo (WFC), JPMorgan (JPM), and Citi (C)
According to the ASX, there are no new company listings this week.
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