Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump’s Bessent tied to Dem donor

While it fell short of actually hitting the level, the ASX200 has been flirting with the 8,500pts mark this week, notching an intraweek all-time high of 8,476pts.

We learned last week Morgan Stanley has called the XJO to hit 8,500pts in the near future – this analysis perhaps less compelling when you realise they released it hours after watching the local bourse hit 8,400pts last week. (Clearly a research note prepared in advance.)

So, make of that what you will.

But do you really need investment bank analysis to see where the tide is going?

Here’s some of the other big ticket items this week I’ve not included in this week’s spiel:

• Israel and Hezbollah ink tenuous ceasefire deal
• Russia reportedly recruiting Houthi Yemeni soldiers for frontline
• Uranium prices fall below US$78/lb on the NYMEX
• Oz core inflation jumped slightly to 3.5% in Oct
• Oz super assets hit over $4T for the first time
• Australian consumer confidence at recessionary levels

APRA dents banking stocks

Banking stocks hit the skids on Monday to open Week 48 of 2024 as local regulator APRA declined to ease home loan lending requirements on banks.

Currently, the Big Four must ensure mortgage customers can repay interest rates 3pts higher than what the current rate actually is, in something of a stress test. APRA decided to keep the status quo, citing forward-looking fears of a weakening labour market.

Some politicians were wanting a world where first homebuyers could take on more debt, but APRA has clearly got a firm hold on common sense.

And given housing remains the biggest component of sticky core inflation in Australia, it’s probably best to tackle that first.

Despite banks falling, it wasn’t enough to stop the ASX200 from clocking a fresh record high right out the gate. 

Trump’s treasury pick ties to Dem donor

A good mood was broadly felt on Monday and that carried throughout the week more or less, especially as Trump picked Scott Bessent for his Treasury pick ahead of January’s throne-taking.

Bessent is perceived as being a more sober choice of executive candidates seemingly ready to hop on board Donald’s second administration, at least compared to other picks like Gaetz (now off the scene) and RFK, whose appointment pushed down Australia’s largest biotech stock last week. 

Here’s the Bessent highlights reel: Yale-taught and former econ teacher; pro-energy, on the Council of Foreign Relations, and former CEO & CIO for Key Square Capital.

But then there’s something interesting going on here, too.

Bessent once also acted as the CIO for Soros Fund Management, with George Soros being a Wall Street figure often the subject of right wing conspiracy theories given his outspoken leftist bias. Well, as ‘left’ as Wall Street gets anyway.

Wikipedia provides a long 30-year plus list of all conspiracy theories tied to George Soros, and it’s undeniably Trumpish in flavour once you get to the 2020s.

So, while removed, you can’t deny it makes Bessent an interesting pick by all counts – especially seeing as Musk once accused Soros of funding an ‘invasion of Europe.’ (Soros is Jewish, and a Democrat ‘megadonor.’)

Tariff shock panic lessened, for now

Trump also took the spotlight, again, with his Truth Social post suggesting 10% tariffs for China – well off the 60% tariff proposal he was throwing around on the election campaign trail.

Markets liked that, but 25% tariffs on Mexico and Canada were perhaps less predicted. All in all, inflationary upside pressure still remains for the US economy, given Trump is determined to revive protectionism.

Next week we head into December, where the question is – will we see a Santa Rally?

Given the performance of the bourse YTD, that seems a pretty safe bet.

Australian Equities

• ASX200 hits new record high out the gate on Monday 
• ASIC reels Webjet into court over alleged misleading prices 
• NOVONIX’s institutional 60cps raise causes ire with some shareholders

Australian Economy

• Oz trimmed mean inflation – our version of ‘core’ – jumps to 3.5% in October
• Australian consumer confidence at recessionary levels
• APRA declines to loosen Oz home loan requirements in face of weakening jobs market
• Oz super assets hit $4.1T for the first time

International Equities

• HP flags persistent weak demand for PCs; Wall Street forecasts drop
• NZ50 flirts with new all time high throughout the week as RBNZ cuts by -50bps 
• China’s big tech companies collectively lost US$41B in value across Week 47 of 2024 

International Economies

• US markets liking Trump’s current non-controversial Treasury pick Scott Bessent
• China’s private capital market continues drying up, hurting startups
• Europe’s core inflation flash rate falls to 2.7% MoM for November

Geopolitics

• Trump unveils plan to place 25% tariffs on Mexico and Canada; but China at 10%
• Hezbollah and Israel truce reportedly looks ‘close’ as of Monday arvo WST
• Russia is now taking Yemeni Houthi soldiers to Ukrainian frontlines: FT 

Commodities

• Lynas Rare Earths tells market REE prices remain contingent on China’s economy
• Bitcoin sees highest AUD inflows since 2021
• Uranium appears to find a new floor around US$77.60/lb

Regulatory, Odds & Ends

• Another Chinese tycoon takes on the Xi Government publicly. Will he vanish for a while, too?
• Trump’s Treasury pick Scott Bessent used to be CIO for George Soros’s wealth
• Facebook says it will need to collect U16 biometric data to comply with social media laws