The good news is the ASX is seeing a green Friday and it’s pretty clear we’re going to close green to end the week. The bad news is over the last month, the ASX200 has gone down more than -4%.
Still, this isn’t the first time we’ve followed American panic into a ditch, and it won’t be the last. It does make things a bit boring, though.
It’s worth recapping what’s happened this week: the RBA raised interest rates, and then, CPI came in at 4%. Australian core inflation (TMI if you want to be pedantic) is sticky at 3.6% and increased 0.2% over the last month.
Not great signs, and many are expecting another RBA rate hike this year. Consider that mortgages are going to get more expensive and house prices are falling (somewhat), and it’s not hard to divine that there’s a general mood of ‘despondency’ in the air right now, to steal VanEck’s phrasing.
Of course, any boomers with multiple paid off properties sitting on millions in a HISA are going to be happy, but that’s part of the economic apartheid problem the controversial ALP budget is intended to address.
(This finance journalist still doesn’t know why they had to interfere with taxes on shares at a time when the ASX broadly needs as much support as it can get.)
So what does next week bring?
Who knows, but as the US 10Y bond yield remains above 5%, it’s likely a sense of caution is going to continue to define markets. Or at least our own, perhaps not Wall Street.
Meta’s release of its ‘Muse’ agentic AI product has put the AI trade back into swing and American exceptionalism remains as robust as ever, especially with an extremely pro-stock-market President.
But Brent Crude remains at US$102/bbl which implies global inflation pressure, and you can see that too in global bond sell-offs (as well as the US and EU central banks also raising rates in recent history.)
Uncertainty remains, and as is increasingly the norm, stock pickers will need to be particularly cautious. I’d say hope for world peace, but, if you’ve read this far you probably know my thoughts there at this point.
Have a great weekend, be well, and we’ll see you on Monday.
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