Join our daily newsletter At The Bell to receive exclusive market insights
The big news of this week is obvious: the Reserve Bank of Australia (RBA) has finally cut interest rates! Except, like we saw in Switzerland, Toronto, London and everywhere else that cut rates before the Fed last year – the market didn’t really care. One singular cut does not an improved economy make.
Oxford Economics’ chief econ Sean Langcake said the move came at an “interesting time,” given the Australian labour market is still quite robust. And given that the RBA is meant to care more about the labour data than the CPI data. Which I feel was his way of suggesting the RBA cut could have been a political decision.
Conspiratorial, perhaps, or maybe just realistic. At any rate, Langers also suspects the unemployment rate will actually go down in February, given the amount of workers waiting to start at new jobs. That, in turn, could make the RBA a bit twitchy.
Bank weakness rattles ASX
And traders in the ASX financials sector are probably a bit twitchy right now, too.
Banks are currently not the overwhelming winners of the half year reporting season for FY25 with Bendigo and NAB both posting shock results early week and helping – along with BHP – to tank the financials sector (and thus the XJO) through Week 8.
So much for that 8,500pts level on the ASX200. While we’re not at any kind of banking crisis level of volatility, some are wondering if this is the end of CBA’s stellar and widely-seen-as-irrational bull run in recent history, given its earnings aren’t really growing.
Still, the bank stocks are still priced at lofty highs, and obviously, a bank is still a fundamentally safe place to invest.
Dutton turns on insurers
Insurance companies might be less so.
That’s because Peter Dutton this week has come out swinging against the insurers – right after floods hit the east coast, don’t forget – and even said he might force insurance companies to break up into smaller companies. That would have the effect of breaking up insurers into smaller companies, and not much else, seeing as he has no plans to actually address the price of insurance.
That comes down to climate change, and he likes to pretend that climate change isn’t real for reasons I can’t really figure out – like, every summer is getting hotter, come on – so I doubt we’ll see any real action there. Still, big insurance stocks fell early week, rattled by the sudden pivot from the pro-business libs.
Russian stocks love Trump
Overseas, Trump has been focused on internal affairs (mostly) in the US, or maybe just keeping tabs on Elon Musk. But the US has re-opened diplomatic ties with Russia, Trump has called Ukraine’s Zelensky a ‘dictator,’ and Trump wants Ukraine to accept Russia’s peace deal (which includes Ukraine presumably losing the ~20% of its territory currently occupied.)
Can’t figure out whose agenda that best serves. Perhaps unsurprisingly, the Moscow Stock Exchange or MOEX is having a pretty good month.
That’s all from me until Week 9 – stay safe and don’t forget the hardest part of investing is knowing when to sell.
ASX Equities
Retail Food Group to introduce US Subway competitor Firehouse Subs to QLD in 2025
Bendigo Bank kicks off painful week for banks with -23% profit decline
Bluescope Steel reveals -60% profit drop but fat dividend appears to excite market
International Equities
India’s stock markets facing tough start to 2025 as economy slows
Morgan Stanley more bullish on China stocks following DeepSeek capability reveal
US exceptionalism not going anywhere as Wall Street keeps clocking new records
Australian Economy
RBA finally delivers rate cut dropping interest rate to 4.1%
But EY, other economists, express concern over Australia’s still-tight labour market
Leading to an April rate cut from the RBA being fairly unlikely
International Economies
UK inflation hits a 10mth high, making things hard for BoE
US Fed expresses concern over impact of Trump tariffs on domestic US inflation
Commodities
Goldman Sachs calls US$3,100/oz price for gold as safe haven to persist
Coffee prices are looking like they’re not reversing any time soon
Geopolitics
Peter Dutton voices disagreement with Trump’s claim Zelensky a ‘dictator’
Trump foregoes all attempts to appear anti-Putin, calls Ukraine’s Zelensky a dictator
Regulatory, Odds & Ends
Microsoft says quantum computing ‘years away’ in latest progress update
Apple unveils cheaper iPhone 16, still with AI, to boost sales
WA Aboriginal Corporation hits Fortescue with a $1B+ lawsuit in state court
