Latest news with #ReserveBankofAustralia
Business Times
17 hours ago
- Business
- Business Times
Australia's August consumer sentiment boosted by rate cuts
[SYDNEY] A measure of Australian consumer sentiment improved sharply in August as the third cut in interest rates this year bolstered the outlook for finances and the economy, a survey showed on Tuesday. A Westpac-Melbourne Institute survey showed its main index of consumer sentiment climbed 5.7 per cent in July to 98.5, the highest reading since early 2022. The reading under 100 means pessimists still outnumber optimists, though only just. The pick-up came after the Reserve Bank of Australia cut interest rates a quarter point to 3.60 per cent and left the door open to further easing this year. REUTERS
Qatar Tribune
2 days ago
- Business
- Qatar Tribune
Global markets pick up amid data, geopolitics and volatile trade trends
Agencies This week saw increased global market activity amidst key economic data releases, central bank signals, trade developments and geopolitical events. In the United States, July data highlighted mixed macroeconomic trends as retail sales rose 0.5 percent MoM following an upwardly revised 0.9 percent gain in June, with nine of 13 categories posting gains, whilst unemployment claims came in at 224K. Inflation remained elevated, with core CPI at 3.1 percent YoY and headline CPI at 2.7 percent YoY, whilst the Producer Price Index jumped 0.9 percent MoM (+3.3 percent YoY), led by services and goods prices. The dollar Index was last seen at 97.839. Markets focused on the September FOMC meeting, with a 25bps cut expected in swaps data. In Europe and the United Kingdom, geopolitical developments dominated as the Alaska summit concluded without a ceasefire pact. UK GDP rose 0.3 percent in Q2, unemployment held at 4.7 percent, and earnings growth remained at 5 percent, whilst German ZEW sentiment fell sharply to 34.7 and eurozone sentiment declined to 25.1; EUR/USD and GBP/USD both edged up on the week. In Asia-Pacific, China's growth softened with industrial output at 5.7 percent YoY, retail sales at 3.7 percent, and new yuan loans contracting for the first time in two decades, as USD/CNY reached 7.1845, whilst Japan's Q2 GDP expanded 1 percent annualized on robust business investment and moderated PPI at 2.6 percent YoY. The Reserve Bank of Australia cut the cash rate by 25 bps to 3.6 percent, with unemployment at 4.2 percent and wage growth at 3.4 percent; AUD/USD ended the week at 0.6507. Equity markets were mixed, Treasury yields experienced volatility amidst inflation numbers, and Brent and WTI crude fell modestly ahead of the Trump-Putin Alaska summit and weaker Chinese data. Spot gold closed the week at $3,336.19 per ounce, easing after President Trump stated that gold imports would be excluded from US tariffs. President Donald Trump confirmed his shortlist for the next Federal Reserve chair has narrowed to 'three or four' candidates, with Kevin Hassett, Kevin Warsh, and Christopher Waller emerging as frontrunners. The US Treasury will interview 11 individuals, including long-shot candidates such as David Zervos, Larry Lindsey and Rick Rieder. Trump has criticized current Chair Jerome Powell, whose term ends in May 2026, for resisting deeper rate cuts, reiterating his preference to lower the federal funds rate from 4.25 percent-4.50 percent to 1 percent. Market focus has shifted to the September meeting, with swaps data now assigning an 85 percent probability of a 25 bps cut following softer jobs and inflation data, whilst some officials advocate a 50 bps move. DXY was last seen at 97.839. Following the US-Russia summit in Alaska, President Donald Trump is redirecting his diplomatic focus toward Ukraine, with President Volodymyr Zelensky set for an Oval Office meeting on Monday. The Alaska talks, held in secrecy with President Vladimir Putin, did not yield an immediate ceasefire, with Moscow insisting Kyiv cede the Donbas region. Trump signaled Zelensky should consider broader peace negotiations, increasing political pressure on Ukraine amidst ongoing European calls for territorial integrity. European officials emphasized that international borders cannot be altered by force and reiterated the need for a trilateral discussion involving Trump, Putin, and Zelensky. The Alaska summit outcome is seen as advancing Russia's diplomatic leverage, whilst Zelensky's forthcoming engagement in Washington will test Ukraine's willingness to negotiate under intensified US pressure. US inflation strengthened in July, with Core CPI rising 0.3 percent MoM (+3.1 percent YoY) and headline CPI up 0.2 percent MoM (+2.7 percent YoY), driven by the largest services cost increase since early 2024. Preliminary UoM consumer sentiment eased to 58.6, whilst one-year inflation expectations rose to 4.9 percent. Producer prices rose 0.9 percent MoM (+3.3 percent YoY), the strongest in three years, led by a 1.1 percent jump in services and 0.7 percent rise in goods. Labour market indicators showed initial jobless claims at 224K and continuing claims at 1.95M, remaining near their highest since 2021, signaling softer hiring and slower re-employment. Treasury Secretary Scott Bessent has called for cumulative Fed easing of 150-175 bps, citing labour market revisions and moderating growth. The Federal Reserve, holding rates at 4.25 percent-4.50 percent, faces balancing persistent price pressures with growing calls for accelerated policy accommodation. The UK economy expanded 0.3 percent in Q2, exceeding the 0.1 percent forecast from both private-sector economists and the Bank of England, with June output up 0.4 percent following minor contractions in prior months. Payrolls fell by just 8,353 in July - the smallest monthly decline since January - bringing total employment losses since October to 165K, notably below earlier estimates. The unemployment rate held steady at 4.7 percent, whilst total earning growth excluding bonuses remained at 5 percent, well above levels compatible with BOE's 2 percent inflation target. Labour market inactivity fell by 156K to 21 percent. These trends complicate the BOE's decision on further rate cuts from 4 percent, with markets now pricing a 3.5 percent terminal rate for 2026, reflecting a moderate but resilient economic environment. GBP/USD was last seen at 1.3554. The German ZEW Economic Sentiment Index declined sharply to 34.7 in August 2025, down from 52.7 in July and below market expectations of 40. The Current Situation Index also deteriorated, falling to -68.6 from -59.5, against an anticipated -65. In the eurozone, sentiment weakened to 25.1 from 36.1, missing forecasts of 28.1, whilst the Current Situation Index dropped to -31.2 from -24.2. According to the ZEW, the decline reflects disappointment over the recently announced EU-US trade deal, coupled with weaker Q2 performance in Germany. Outlooks for the chemical, pharmaceutical, mechanical engineering, metals, and automotive sectors have worsened. The data signals a broad cooling in investor sentiment, with downward revisions in growth expectations extending beyond Germany to the wider monetary union. EUR/USD was last seen at 1.1706. China's economy lost momentum in July, with broad-based weakness across production, consumption, and investment. Industrial output grew 5.7 percent YoY, down from June's 6.8 percent and the slowest pace since November 2023, whilst retail sales rose 3.7 percent, the weakest this year and below the prior month's 4.8 percent. Fixed-asset investment in January-July slowed to 1.6 percent, reflecting deeper contraction in the property sector. The urban unemployment rate climbed to 5.2 percent. Credit conditions deteriorated sharply, with yuan-denominated new loans declining by CNY 49.9B (USD 7B), the first contraction since July 2005, as households and corporates focused on debt repayment over new borrowing. Medium- and long-term loans fell, with corporate borrowing down for the first time since 2016. The data signals heightened downside risks, potentially prompting further targeted policy support in coming months. USD/CNY was last seen at 7.1845. Japan's economy grew at an annualized 1 percent in the April-June quarter, exceeding the 0.4 percent market forecast and following an upwardly revised 0.6 percent expansion in Q1. Growth was driven by a 1.3 percent QoQ rise in business investment, above the 0.7 percent consensus, and a 0.2 percent gain in private consumption, supported by solid wage growth. Net exports added 0.3 percent to GDP, with export volumes rising 2 percent despite higher US tariffs, aided by resilient tourism spending, which increased 18 percent YoY. The data bolsters the case for a potential Bank of Japan rate hike later in 2025, with swap markets currently discounting 17 bps worth of hikes by year end. in October. Producer price index inflation eased to 2.6 percent YoY in July, its slowest in 11 months, signaling moderated upstream cost pressures despite ongoing trade headwinds. USD/JPY was last seen at 147.19.
Business Recorder
5 days ago
- Business
- Business Recorder
Australian shares cross 8,900 level for first time, banks do the heavy lifting
Australian shares crossed the key 8,900 level for the first time on Friday, buoyed by gains in major banks as investors piled into financials despite stretched valuations on hopes that rate cuts would spur credit and economic growth. The S&P/ASX 200 index was up 0.2% at 8,894.60, as of 0103 GMT, after briefly crossing the 8,900 mark earlier in the day. The benchmark touched an all-time high of 8,901.80 points. The index was up about 1% for the week in what would be its second straight weekly gain. The Reserve Bank of Australia cut the cash rate by 25 basis points on Tuesday, matching market expectations, and leaving its door open for further policy easing this year to meet inflation and employment goals as the economy has lost some momentum. Financial and real estate stocks are expected to benefit from lower cash rates, which usually lead to higher lending volumes. Banks have risen 0.3% so far this week in what could be their third straight week of gains. Top lender CBA was down 0.3% for the day and set to log a weekly loss of 5.6%, its worst since mid-February. CBA reported a record annual profit on Wednesday, but investors dumped its shares on valuation concerns. Shares of ANZ were trading 1.3% higher after the country's fourth-largest bank in terms of market value reported a rise in deposits and loans for the third quarter. Tony Sycamore, market analyst at IG, also credited the index's momentum to strong corporate earnings of this week, including from Westpac, Suncorp and Origin. Real estate stocks climbed 0.2%, with Charter Hall Retail REIT and Goodman Group rising about 0.3% each. Miners climbed 0.6% even after iron ore prices closed lower overnight. BHP and Rio Tinto climbed 0.6% each, while Fortescue rose 1.3%. New Zealand's benchmark S&P/NZX 50 index rose 0.3% to 12,865.81. Reuters
Yahoo
5 days ago
- Business
- Yahoo
Major cash hit for millions as savings rates drop today after RBA decision
Several major banks have slashed their interest rates on savings accounts after the Reserve Bank of Australia's (RBA) move earlier this week. The central bank dropped the cash rate from 3.85 per cent to 3.60 per cent, which will be great news for homeowners as their mortgage repayments will fall. However, this decision can sometimes cause savings rates also fall, and those with the Bank of Queensland (BOQ), NAB, and Macquarie have been hit with a reduction on Friday. Finder's head of consumer research, Graham Cooke, told Yahoo Finance that one group of people will be hit particularly hard by this. "Over the last couple of years, one of the things that was contributing to the cost-of-living crisis was interest rates going up," he said. RELATED Mortgage broker reveals $112,000 home loan mistake Work from home shift for millions of Aussies as 'clear link' with salaries revealed Hidden $3,000 per year cost of cashless revolt as record number of banknotes hoarded "So mortgages went up, but rents were also going up because landlords who were renting out their houses had mortgages, and they were pushing up rent. "Now mortgages are coming down and every homeowner is going to get probably a 1 per cent drop on their mortgage by the end of the year, which will be a huge saving. "They're not going to pass that on to renters, though." He said tenants will not only not receive a reprieve in their rent prices, but they will receive less money from their cash that's sitting in their bank much have savings interest rates fallen? In the wake of the RBA's decision to lower the cash rate on Tuesday, seven banks have reduced their savings rates. The rate for BOQ's Future Saver account fell from 5.10 per cent to 4.85 per cent on Friday, which is an account designed for people aged 14 to 35. The bank's Smart Saver also suffered a 0.15 per cent reduction. Two savings accounts at NAB, Reward Saver and iSaver, dropped by 0.25 per cent. There was also a 0.25 per cent cut in the transaction account and savings account at Macquarie Bank. However, mortgage holders on a variable rate will also see a cut in their interest repayments. Those with savings accounts at AMP, Great Southern Bank, ME Bank and Hume Bank will also see their savings rates fall from this week. Are more cuts coming? Savings rates could soon tumble at Commonwealth Bank and ANZ as those are currently "under review", while Westpac savers will see a 0.25 per cent drop in the rate for the Life and eSaver rates on August 22. The bank's Spend&Save, which is for 18-29-year-olds, will be spared from any reductions and will stay at 5 per cent for now. Canstar's data and insights director Sally Tindall warned there could be many more banks jumping on this trend in the weeks ahead. "Banks aren't likely to make a song and dance about them," she said. 'Our rate tracker shows more than 60 banks have rushed to share the good news on mortgage rates, yet many banks are leaving their savings customers guessing." Double-edged sword of RBA's falling cash rate Homeowners had been pleading with the RBA to drop interest rates after they were raised more than a dozen times from May 2022 to November 2023. The 4.35 per cent cash rate was then held all the way until February this year when the first rate cut since 2020 was approved. We've had two more rate cuts since then, which Tindall said have had an unfortunate impact on savings rates. "The third RBA rate cut of the year is already hitting savers in the hip pocket," she said. 'If your bank hasn't told you what's happening with your savings yet, don't wait – call, email, or even reach out on social media. "It's your hard-earned money, and you have every right to know where your rate is headed.' Once the dust settles on this third round of savings rate cuts, she predicted a competitive rate will likely be 4.75 per cent or above, however you might have to meet monthly terms and conditions to access this higher in retrieving data Sign in to access your portfolio Error in retrieving data
Business Times
5 days ago
- Business
- Business Times
RBA says decline in competition costs Australians A$3,000 per person
[SYDNEY] A decline in business competition in Australia from the mid-2000s to the Covid-19 pandemic has hurt productivity and household incomes, according to new analysis by the Australia central bank. If competition had not dropped, productivity and therefore output would have been 1 to 3 per cent higher due to resources being better allocated across firms in the economy, Reserve Bank of Australia's (RBA) Jonathan Hambur and Owen Freestone said in a research paper released on Thursday (Aug 14). This equates, at the upper end, to around A$3,000 (S$2,511) per person, they said. The duo said there's 'substantial evidence' that competition slid over the 'decade or so' leading up to the pandemic. Markets became more concentrated, with dominant firms securing a larger share of sales, becoming more entrenched and harder to displace, while markups — the ratio of price to marginal cost — also rose. 'One way in which weaker competition may have led to lower productivity is by causing a misallocation of resources across firms,' they said. The RBA this week blamed weak productivity for sluggishness in the economy, assessing potential growth at around 2 per cent, down from 3 per cent two decades ago. Australia's centre-left government will convene a three-day roundtable in Canberra next week to generate ideas to boost economic efficiency. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'The past decline in competition has significantly dragged on aggregate productivity over the period,' Hambur and Freestone said. They added that according to the model they used, this shouldn't weigh on future productivity gains. 'However, if competition continues to weaken, or if weaker competition was to weigh on a firm's impetus to improve (which is not captured in the model), there still could be ongoing effects,' they said. The RBA, in its quarterly update of forecasts released on Tuesday, downgraded its productivity growth assumption to 0.7 per cent from 1 per cent. governor Michele Bullock addressed the change in a news conference that day. 'One of the reasons we've come to this position is that our forecasts were such that we were hitting our employment and our inflation forecasts, but we were overestimating our GDP and our consumption forecasts,' she said. 'So there was a tension.' BLOOMBERG
