Monthly Economic Videos
Each month we will bring you a video on an update of what is happening in the economic world.
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While headline inflation eased to 2.8% in the September quarter, the RBA appears cautious on interest rates.
The RBA Governor stated that Australia’s core inflation remains too elevated to justify interest rate cuts in the near term.
The sharemarket reacted to the RBA’s comments in the last days of a month that had seen several all-time highs as markets globally reacted to Donalds Trump’s win.
Welcome news on the inflation front in October pointed to the Reserve Bank of Australia (RBA) holding steady on rates this month.
The latest quarterly inflation figures show inflation has slowed to its lowest level since the height of the pandemic and now sits within the RBA’s target range at 2.8%.
Global share markets softened in the final two weeks of October, reflecting economic and geopolitical uncertainly.
The S&P/ASX 200 closed slightly down over the month of October, after again reaching record highs mid-month.
With the US election on the horizon there is much speculation about what that will mean for markets and the economy, both in the US and Australia.
Interest rate speculation is rife after the Reserve Bank of Australia (RBA) kept rates on hold at 4.35% last month.
RBA Governor Michelle Bullock believes it may be “some time” before inflation is “sustainably in the target range”, with concerns about inflation, excess demand, low productivity, and a still tight labour market.
The S&P/ASX 200 reached a new record high, up 2.2% for the month and 7.89% for the year, reflecting global optimism on the macro-economic front.
Global stock markets – including the ASX – largely stabilised by the end of August after a turbulent month.
It was a rocky start when markets everywhere fell after news of high unemployment figures in the US and an interest rate move by Japan’s central bank.
Expectations of interest rate cuts later this year in Australia and the United States fuelled activity in the markets last month.
Australian shares reached a new record high at the end of the month, driven by mining shares with gold, iron ore and lithium all rebounding.
US markets also reached new highs during March, leaving the benchmark index up more than 10 percent so far in 2024.
The economic indicators for February were mixed.
Inflation has remained at a two-year low, giving confidence of a possible rate cut in coming months, and business capital investment rose in the December quarter.
However, the Australian dollar remained in the doldrums and retail figures from January remained weak, after a 2.1% loss in December.
Cooling inflation and a strong economy with relatively low unemployment has sent investors back to Australian shares towards the end of January.
The lower than anticipated inflation figures fuelled optimism at the end of the month, for the possibility of earlier cuts in domestic interest rates.
Consumer prices eased by more than expected in October. The news that inflation may have been tamed means interest rate rises may be behind us, for now.
Even the Organization for Economic Cooperation and Development (OECD) is optimistic about our economic recovery, predicting rate cuts from late 2024.
The ASX200 regained most of its October losses through November. Hopes the US may be ceasing its interest rate hikes impacted investor sentiment, as did the better than expected inflation figures locally.
October was a volatile month on the global stock markets and in Australia. The local sharemarket finished October down 3.8 per cent, representing a third straight month of losses.
Investor sentiment reflected heightened anxiety regarding inflationary pressures and uncertainty over rate rises, mixed economic data and concerns about the Israel-Hamas conflict.
Investors are continuing to keep a close eye on oil price movements over fears of an escalation of conflict in the Middle East.
Household wealth has grown for the third quarter in a row, rising by 2.6% in the June quarter, pushed up by rising house prices and increases in super balances.
After endless gloomy forecasts, there was a glimmer of hope last month that the cost of living might be easing.
Inflation continued to fall, despite predictions by economists of a rise.
The ASX200 ended the month down with gains in financial stocks being offset by losses in mining and energy shares because of their dependency on China.
While the price of most goods and services continues to rise, the good news is the rate of increase is continuing to slow.
As a result, the markets are beginning to breathe a sigh of relief.
The ASX rallied to close the month on a positive note due to a combination of stronger than expected growth data, better than expected earnings and lower inflation.
As the inflation rate begins to ease, with consumer inflation slowing to a 13 month low in May, many commentators expressed hope that further interest rate rises may be kept in check.
That led to a slight improvement in investor outlook for stocks at the end of June.
The S&P/ASX 200 closed the month at about the same level as in May but, over the financial year, it’s risen more than 10%.
In the lead up to the Federal Budget, better-than-expected inflation figures were cause for optimism that the lengthy run of cash rate hikes have had an impact.
US stocks in April saw the biggest rally that has been experienced for months, as investors looked beyond gloomy economic data.
Local markets were buoyed by the Wall Street rally, as well as welcome signs of inflation easing, with the ASX200 ending the month slightly higher.
March was marked by banking failures in the US that sent ripples through global sharemarkets.
However, the first quarter of 2023 ended on a note of optimism in Australia due to better-than-expected inflation figures and expectations of a tempering in rate rises.
The gloomy prospects for economic growth, both in Australia and overseas, are occupying the minds of investors, businesses and political leaders.
The early 2023 stock market rally appears to be fading as concerns about inflation and cash rate hikes are having an impact on investor sentiment.