liveMarkets live: Markets and economists split on chances of RBA rate hike, ASX slips
The Australian share market has slipped in afternoon trade, ahead of tomorrow's Reserve Bank decision.
Although money markets are betting the RBA will pause its rate-hiking cycle, economists from some of Australia's major banks are expecting the central bank to lift rates to a fresh 12-year high.
See how the trading day unfolds on our live blog.
Disclaimer: This blog is not intended as investment advice.
Key events
Live updates
Market snapshot at 1:55pm AEST
By David Chau
- ASX 200: -0.1% at 7,397 points
- Australian dollar: +0.4% to 66.74 US cents
- Nikkei: +1.3% to 33,185 points
- Hang Seng: +1.6% to 20,224 points
- Shanghai Composite: +0.6% to 3,297 points
- Spot gold: -0.3% at $US1,954/ounce
- Brent crude: -0.6% to $US84.50/barrel
- Iron ore: +0.1% to $US106.80/tonne
- Bitcoin: +0.3% to $US29,46027
Bubs Australia's sales in China plunge 96%
By David Chau
Infant formula maker Bubs Australia has revealed its sales in China have plunged even further, as it takes legal action against its Hong Kong-based distributor AZ Global.
Bubs reported that its China sales slumped 96% in the June quarter.
"As a consequence of the excess stock-in-trade and the ongoing dispute with Willis and Alice, sales into China remain subdued," Bubs wrote in a statement.
"China Q4 gross revenue of $1.4 million was down 96 per cent on prior corresponding period and down 55 per cent on Q3."
The company is suing Willis Trading and Alice Trading, two entities that are associated with AZ Global.
Bubs blames its excess stock, and $5.65 million worth of debt, on AZ Global - which allegedly failed to sell its new "Supreme" range of formula.
Earlier this year, Bubs was also embroiled in a dispute with its founder Kristy Carr and former executive chairman Dennis Lin, who were sacked from the board.
Bubs' share price was down 2.5% to 19.5 cents by 3:30pm AEST.
Ecofibre skyrockets on supply deal with Under Armour
By David Chau
Shares of hemp manufacturer Ecofibre surged by as much as 106% on Monday morning.
This was after the company said its specialty manufacturing division Hemp Black had signed a memorandum of understanding with US sportswear giant Under Armor - to supply it with specialty yarn.
However, the excitement for the small-cap stock (worth $76 million) has fizzled out dramatically since then.
Its share price is now up 17.7% to 20 cents.
Ecofibre said the initial term of its supply agreement will last three years, and it expects to earn an additional $9 million in revenue at full production.
Aussie dollar rises, China's factory activity falls for fourth straight month
By David Chau
The Australian dollar is a little stronger after some disappointing Chinese manufacturing data was released, which reinforced expectations that Beijing will have to pump more stimulus into its economy.
The local currency had risen 0.4% to 66.74 US cents by 1:10pm AEST.
But the Australian share market erased most of its early gains, with the ASX 200 flat at 7,406 points.
China's manufacturing activity shrank for a fourth straight month in July (albeit at a slower pace), according to results of a factory survey published today by the country's National Bureau of Statistics.
The official purchasing managers' index (PMI) was at 49.3 points this month (a slight improvement over the 49-point reading it scored in June).
Any score below 50-points means the industry is contracting (while a score above 50 mean it's expanding).
The world's second-largest economy grew at a slow pace in the June quarter, as demand remained weak at home and abroad, leading the Politburo - a top decision-making body of the ruling Communist Party - to describe economic recovery as "tortuous".
Despite that, it was a strong day for Asian stock markets with the Nikkei, Shanghai Composite and Hang Seng rising by 1.5%, 0.6% and 1.5% respectively.
Slim majority of economists in Reuters poll anticipating RBA rate hike tomorrow
By David Chau
There's a big divide on what the Reserve Bank will do tomorrow — depending on whether you ask an economist, or pay attention to the market's pricing.
The RBA is expected to lift rates once more by 0.25 percentage points on Tuesday, and pause for the rest of the year as inflation is still running well above the target, according to a slim majority of economists in a Reuters poll.
Here's what Reuters is saying:
Although the RBA has raised rates by a total of 400 basis points since May 2022, inflation was still running at 6% in the last quarter (double the upper end of the 2-3% target range).
A record low unemployment rate and a rebound in house prices in Australia - one of the world's most expensive housing markets - suggests the RBA still needs to raise base borrowing costs.
Most global central banks are inching closer to the end of an historic tightening campaign, including the US Federal Reserve, and economists also expect the RBA will be done soon.
Thirty-six economists were surveyed by Reuters, in a poll taken on July 26-28.
Over 55% of those economists forecast the RBA to raise its official cash rate by 25 basis points to 4.35%, the highest in nearly 12 years, at its August 1 meeting.
The remaining 45% expected no change to the cash rate target.
But financial markets were pricing in only a one in five chance of that happening.
Among major local banks, Commonwealth Bank and Westpac expected a 25 basis points hike tomorrow, while ANZ and NAB predicted a pause.
Origin Energy posts 12% drop in quarterly revenue from Australia Pacific LNG
By David Chau
Origin Energy, which is set to be taken over by a Brookfield-led consortium, said revenue from its share of the Australia Pacific LNG project (APLNG) fell 12.3% in the fourth quarter, hurt by lower prices.
Oil and liquefied natural gas (LNG) prices have fallen from their 2022 peaks as slower-than-expected economic growth in key consumer China and concerns about global economic prospects cloud the outlook for fuel demand.
Australia's second-largest power producer said its share of revenue from APLNG — a joint venture with ConocoPhillips and Sinopec — fell to $611 million for the three months to June 30 (compared with $697 million a year earlier).
Origin, which is nearing the conclusion of its $15.35 billion takeover by a consortium led by Canada's Brookfield, said the average realised price for LNG in the quarter was $US12.24 per metric million British thermal unit (mmBtu).
It's a significant drop from the price it fetched for LNG a year earlier ($US14.24 per mmBtu).
By 12:10pm AEST, Origin Energy's share price was flat at $8.52.
- Reuters / ABC
Kanye West welcomed back as Twitter becomes 'X'
By David Chau
Kanye West is officially back on Twitter nearly eight months after having his account suspended.
The rapper, who is now legally known as Ye, was kicked off the platform in December 2022 for repeated anti-Semitic posts, including sharing an image of a swastika merged with the Star of David.
Elon Musk took over Twitter in October 2022 and has now rebranded it as X.
Ye won't be eligible to monetise his account on X, and advertisements won't appear next to his posts, the Wall Street Journal has reported, citing the social media platform.
For more, here's the ABC's coverage of this story:
Action on silicosis stalled as surveillance program estimated to miss 200 workers with deadly disease
By David Chau
As calls to ban engineered stone kitchen benchtops grow louder, a surveillance program in NSW is estimated to have missed a staggering 200 workers who have developed the crippling work-related lung disease silicosis but have not been diagnosed.
But the actual number of workers who have silicosis in NSW and Australia more broadly is unknown due to a lack of comprehensive and coordinated screening.
It means the number of workers who have died from silicosis in Australia is also unknown.
For instance, illegal workers exposed to silica dust may have symptoms but don't get treatment because they are scared of being deported.
The reality is these shiny stone benchtops are not a necessity and too many of our tradies who work with them are getting sick or dying, writes Adele Ferguson:
ASX lifts despite mixed performance from mining stocks
By David Chau
The Australian share market has begun its week slightly higher, with the industrials and energy sectors posting the largest gains.
The ASX 200 index was up 0.3% by 11am AEST.
Lynas Rare Earths was one of the best-perfroming stocks, after its share price jumped 4%.
This was despite the company revealing its fourth-quarter revenue plunged 47% (as it was hurt by lower market prices for rare earth products during the quarter).
The world's largest producer of rare earths outside of China said sales revenue was $157.5 million for the three months ended June 30 (compared with $294.5 million a year ago).
On the other hand, shares of IGO fell 4.1% despite the lithium miner reporting a small increase in its June quarter sales revenue, compared to the same period last year.
However, the worst performer was Silver Lake Resources.
The gold miner's share price plunged 23.1% after it released quarterly results which fell below market expectations.
Market snapshot at 10:20am AEST
By David Chau
- ASX 200: +0.3% to 7,423 points
- Australian dollar: +0.2% to 66.6 US cents
- Dow Jones: +0.5% to 35,459 points
- S&P 500: +1% to 4,582 points
- Nasdaq: +1.9% to 14,317points
- FTSE: flat at 7,694 points
- Stoxx Europe 600: -0.2% to 471 points
- Spot gold: -0.1% at $US1,958/ounce
- Brent crude: -0.1% to $US84.90/barrel
- Iron ore: +0.1% to $US106.80/tonne
- Bitcoin: -0.2% to $US29,272
Markets pricing in 8% chance of Reserve Bank rate hike, according to ASX indictator
By David Chau
The likelihood of whether the Reserve Bank will lift interest rates or not at its next meeting (August 1) has fluctuated wildly in the past few weeks.
The ASX's RBA Rate Indicator shows, on July 21, the odds of a rate hike surged to 48% after the Bureau of Statistics revealed the unemployment rate remained steady at 3.5% (near its lowest level in 50 years).
Five days later, the probability fell to 14% when the ABS announced that inflation fell at quicker-than-expected pace in the June quarter.
The odds continued to fall on Friday (down to 8%), after the latest retail sales figures came in worse-than-expected:
What happened on Wall Street last week?
By David Chau
A strong lead from Wall Street is likely to boost the Australian share market in morning trade.
The Nasdaq climbed 2%, while the S&P rose 1%, and the Dow Jones gained 0.7% throughout last week.
The gains gave the S&P 500 its highest close since April 4, 2022.
On Wednesday, Federal Reserve Chair Jerome Powell said the Fed was not forecasting a recession and did not rule out another rate hike, saying it would follow future economic data.
To complete a week of encouraging signs, more than half of the firms listed on the S&P 500 have reported second-quarter earnings as of Friday, out of which 79% have surpassed analyst expectations, according to Refinitiv data.
Most of the 11 major S&P 500 sectors posted gains, led by communications services, which gained 2.3% as big tech companies maintained a strong upward trend after announcing earnings last week.
Jump in 'quick home resales' blamed on rising mortgage stress
By David Chau
A surge in sales of homes purchased within the past two or three years has analysts and agents concerned the property market is rolling over as mortgage stress bites.
The proportion of homes for sale that were purchased less than two years ago is at the highest level since at least 2014, according to CoreLogic data prepared exclusively for ABC News.
In April, 8.3% of properties that were sold had previously changed hands within the past two years, a steep increase since a pandemic low in mid-2021.
Almost 14% of homes sold across Australia in April had previously changed hands within the three years prior.
Hobart had the highest portion of properties resold within three years, at almost 16%, followed by Brisbane (15.2%) and the ACT (13.9%).
For more, here's the story by Michael Janda and Rachel Pupazzoni:
Economists divided on whether RBA will lift interest rates tomorrow
By David Chau
The Reserve Bank board will meet tomorrow to discuss whether it should lift interest rates — or "pause" for the second month in a row.
Some economists say the RBA should keep rates on hold after last week's worse-than-expected retail sales figures (-0.8% in June).
The faster-than-expected fall in inflation (+6% in the June quarter) is another factor cited as a reason for the central bank to keep its cash rate target steady at 4.1%.
But the unemployment rate (at 3.5%) is still near a 50-year low, which the RBA worries could lead to workers bargaining for subsantially higher wages (which would lead to higher inflation).
For more on this dillema, here's the latest report from the ABC's senior business correspondent Peter Ryan:
ASX to rise ahead of tomorrow's RBA decision
By David Chau
Good morning! I'll be here to guide you through the latest business and economic news.
The local share market is likely to open higher, with ASX futures suggesting a 0.3% rise in morning trade.
It comes after a strong finish on Wall Street last Friday (US time), which saw the Dow Jones, S&P 500 and Nasdaq Composite rise 0.5%, 1% and 1.9% respectively.
In economic news, the key event is tomorrow's Reserve Bank board meeting.
Markets are betting the likelihood of of an interest rate hike is around 20%, according to Refinitiv data.
However, economists from Westpac, Commonwealth Bank and other places are predicting the RBA will (more likely than not) lift its cash rate target.
If the RBA keeps rates on hold, it would mean the cash rate remains at a decade high of 4.1%.
Market snapshot at 8:30am AEST
By David Chau
- ASX futures: +0.3% to 7,376 points
- ASX 200 (Friday close): -0.7% to 7,404 points
- Australian dollar: +0.1% to 66.55 US cents
- Dow Jones: +0.5% to 35,459 points
- S&P 500: +1% to 4,582 points
- Nasdaq: +1.9% to 14,317points
- FTSE: flat at 7,694 points
- Stoxx Europe 600: -0.2% to 471 points
- Spot gold: flat at $US1,960/ounce
- Brent crude: -0.1% to $US84.90/barrel
- Iron ore: +0.1% to $US106.80/tonne
- Bitcoin: -0.7% to $US29,149
ABC/Reuters