Latest news with #ShaneOliver
West Australian
an hour ago
- Business
- West Australian
RBA interest rate cuts are boosting borrowers and will likely push up house prices
Economists have upped their forecasts for Aussie house prices this year amid growing optimism that the Reserve Bank will cut interest rates further. Borrowers have received two doses of relief since February as the official cash rate fell from 4.35 per cent to 3.85 per cent. Financial markets have tipped another three cuts by the end of the year, with the RBA turning focus from fighting inflation towards the fallout of President Donald Trump's trade war. Fresh data from Cotality on Monday showed national home values had lifted 1.7 per cent in the five months to May. Sydney's median value passed $1.2m. Banks AMP and UBS both now tip prices to lift more than 5 per cent through 2025. AMP's Shane Oliver said the upswing had started following the RBA's rate cut in February and had accelerated after the move in May. 'More RBA rate cuts along with the ongoing housing shortage and the anticipation of more support for first home buyers are expected to drive further gains in average prices this year,' he said. 'Poor affordability, slowing population growth and a dampening impact on economic growth from Trump's trade war will act as a constraint.' Analysts from investment bank UBS warned more homes would need to be built. 'Housing supply appears likely to remain relatively weak, which is disappointing given RBA rate cuts should boost demand,' the report said. 'UBS models of housing show under-building is still massive, despite population growth slowing more recently. 'This is putting upward pressure on prices.' The bank also found that households were saving a big proportion of their spare cash following the previous two rate reductions by the RBA. ANZ and Commonwealth Bank both predicted a further two rate cuts this year, which the banks said would add to house price growth. Minutes from the RBA's May meeting will be released on Tuesday, giving analysts a closer look at the central bank's pathway ahead. Economic growth data for March is due on Wednesday, which was expected to run at 0.5 to 0.6 per cent for the quarter.
Yahoo
3 days ago
- Business
- Yahoo
ASX has best month since January
Australia's sharemarket rose for the second consecutive month in May, as traders dial up the chances of a rate cut in July following weaker than expected retail sales. The benchmark ASX 200 index gained 24.90 points or 0.30 per cent on the final day of trading for May. Australia's major index has closed up 3.8 per cent in May which is the best monthly gain since January. Meanwhile the broader All Ordinaries also finished higher up 22.50 points or 0.26 per cent to finish the month at 8,660.30. The Australian dollar slipped 0.28 per cent during Friday's trading and is now buying 64.26 US cents. On an overall positive day for the market, seven of the 11 sectors finished in the green, led by consumer staples, utilities and financials. The bounce in consumer staples was led by Treasury Wine Estates up 4.07 per cent to $8.44, while the A2Milk Company rose 3.35 per cent to $8.33. The two major supermarkets also finished in the green, with Woolworths gaining 0.70 per cent to $31.85 while Coles eked out a gain of 0.28 per cent to $21.60. All four of the major banks also finished higher during Friday's trading. Westpac led the charge gaining 2.68 per cent to $32.56, NAB gained 1.33 per cent to $38.00, CBA jumped 0.87 per cent to $175.95 and ANZ finished higher up 0.41 per cent to $29.04. The gains come despite other Asian markets slumping on the back of the White House winning an administrative stay on the blockage of most of its tariffs by the US Court of International Trade. senior financial market analyst Kyle Rodda said the US market gave back its gains after the tariff news was announced. 'The caution reflects the fact that although market sentiment has been supported by the prospect of the judiciary halting arguably Presidential overreach with tariffs and trade policy, the decision marks the beginning of a new source of uncertainty rather than the total closure of another,' he said. Australia's sharemarket however was lifted on the back of weaker than expected retail sales. While this is bad for some businesses, the money markets factored in a greater chance of a rate cut in July following the announcement that retail sales fell 0.1 per cent over the month of April compared with expectations of a 0.3 per cent rise. AMP chief economist Shane Oliver said the results were surprising given Queensland was coming off a low base due to ex-Cyclone Alfred as well as most Aussies benefiting from a double Easter/Anzac Day long weekends. 'Tax and rate cuts will help but the consumer is still clearly struggling with real retail sales per person trending down so far this year after a mild rise into late last year,' he wrote in an economic note. 'The cost of living remains a problem – falling inflation is not the same thing as falling prices.' In company news, Ramsay Health Care jumped 5.89 per cent to $38.30 on the back of reports in the Newcastle Herald claiming the Australian hospital operator won approval of its new building applications in NSW. Shares in fintech Findi slumped 8.91 per cent $4.60 despite reporting a 54 per cent gain in underlying profits to $6m. Sign in to access your portfolio
West Australian
3 days ago
- Business
- West Australian
Weak retail sales boost rate cut hopes as ASX climbs on Friday
Australia's sharemarket rose for the second consecutive month in May, as traders dial up the chances of a rate cut in July following weaker than expected retail sales. The benchmark ASX 200 index gained 24.90 points or 0.30 per cent on the final day of trading for May. Australia's major index has closed up 3.8 per cent in May which is the best monthly gain since January. Meanwhile the broader All Ordinaries also finished higher up 22.50 points or 0.26 per cent to finish the month at 8,660.30. The Australian dollar slipped 0.28 per cent during Friday's trading and is now buying 64.26 US cents. On an overall positive day for the market, seven of the 11 sectors finished in the green, led by consumer staples, utilities and financials. The bounce in consumer staples was led by Treasury Wine Estates up 4.07 per cent to $8.44, while the A2Milk Company rose 3.35 per cent to $8.33. The two major supermarkets also finished in the green, with Woolworths gaining 0.70 per cent to $31.85 while Coles eked out a gain of 0.28 per cent to $21.60. All four of the major banks also finished higher during Friday's trading. Westpac led the charge gaining 2.68 per cent to $32.56, NAB gained 1.33 per cent to $38.00, CBA jumped 0.87 per cent to $175.95 and ANZ finished higher up 0.41 per cent to $29.04. The gains come despite other Asian markets slumping on the back of the White House winning an administrative stay on the blockage of most of its tariffs by the US Court of International Trade. senior financial market analyst Kyle Rodda said the US market gave back its gains after the tariff news was announced. 'The caution reflects the fact that although market sentiment has been supported by the prospect of the judiciary halting arguably Presidential overreach with tariffs and trade policy, the decision marks the beginning of a new source of uncertainty rather than the total closure of another,' he said. Australia's sharemarket however was lifted on the back of weaker than expected retail sales. While this is bad for some businesses, the money markets factored in a greater chance of a rate cut in July following the announcement that retail sales fell 0.1 per cent over the month of April compared with expectations of a 0.3 per cent rise. AMP chief economist Shane Oliver said the results were surprising given Queensland was coming off a low base due to ex-Cyclone Alfred as well as most Aussies benefiting from a double Easter/Anzac Day long weekends. 'Tax and rate cuts will help but the consumer is still clearly struggling with real retail sales per person trending down so far this year after a mild rise into late last year,' he wrote in an economic note. 'The cost of living remains a problem – falling inflation is not the same thing as falling prices.' In company news, Ramsay Health Care jumped 5.89 per cent to $38.30 on the back of reports in the Newcastle Herald claiming the Australian hospital operator won approval of its new building applications in NSW. Shares in fintech Findi slumped 8.91 per cent $4.60 despite reporting a 54 per cent gain in underlying profits to $6m.
Daily Mail
6 days ago
- Business
- Daily Mail
Why Aussies could be getting a bigger rate cut that forecast - but it's not necessarily good news
A top economist has revealed interest rates could be slashed even more than forecast due to Donald Trump's tariffs. The futures market now sees the Reserve Bank slashing the cash rate to 3.1 per cent by November. This would imply three more 25 basis point rate cuts on top of this month's relief, that took the cash rate down to 3.85 per cent for the first time since June 2023. But AMP chief economist Shane OIiver said there was an outside chance of interest rates falling even lower to 2.85 per cent by early 2026. This scenario would see the Reserve Bank cut rates in August, November and February, on top of a possible cut at its next meeting in July to stop unemployment from rising. Dr Oliver told Daily Mail Australia Donald Trump 's tariffs had hit Australia's biggest exports and discouraged businesses from hiring new staff. 'Tariffs mean less trade globally which could mean lower growth globally, particularly for countries like China - that could mean less demand for our exports and lower commodity prices,' he said. 'It's a hit to exports, it's a hit to national income, because of lower prices for iron ore and gas and coal. 'There's also an impact on confidence: some businesses being less likely to invest and also potentially consumer confidence; when people hear about this threat to growth from the tariffs, they're probably a bit less inclined to spend.' Reserve Bank Governor Michele Bullock last week revealed her board had considered a bigger 50 basis point rate cut. 'If they're thinking about a 50-point cut, then they must be a bit worried about the growth outlook - that just highlights that there is a serious issue here,' Dr Oliver said. 'That's a factor that made me think that they could go as early as July.' Dr Oliver said this consideration made a July 8 rate cut more likely, without the RBA waiting for June quarter inflation data. But he said a bigger 50 basis point rate cut, for the first time since May 2012, would only occur if Trump announced a new set of tariffs that sparked another share market plunge. 'I think to get 50, you'd probably have to see share markets plunge back to where they were in April, the lows - Donald Trump ramps up the trade pressure again,' he said. A 2.85 per cent RBA cash rate by early 2026, for the first time since December 2022, would be marginally above the Reserve Bank's 2.8 per cent neutral level, where monetary policy is neither trying to crush inflation nor stimulate more spending in the economy. Should the RBA cuts rates to 2.85 per cent, a borrower with an average, $660,000 mortgage would see their annual mortgage repayments fall by $6,252, as variable home loan rates fell under five per cent. Monthly repayments would fall from $4,060 now to $3,539. The Commonwealth Bank, ANZ and NAB are passing on the RBA's latest rate cut on May 30. Trump is now threatening new 50 per cent tariffs on the EU and wants Apple iPhone production to shift from China to the United States. Dr Oliver predicted this would see the price of an iPhone 16 more than double from $US1,000 to $US2,500 - or $A1,543 to $3,859. Underlying and headline inflation are both within the RBA's two to three per cent target and another reading showing inflation within the band would give the RBA leeway to cut rates. Australia's economic growth pace of 1.3 per cent is less than half the 20th century average of 3 per cent. But unemployment is still low at 4.1 per cent without causing a spike in wages. 'If you get sub-par growth on the back of Trump's tariff war, then that could push unemployment beyond the level consistent with full employment,' he said.
Yahoo
25-05-2025
- Business
- Yahoo
One word costing Aussies billions
Australian consumers could benefit from cheaper luxury goods as countries look for new trade deals following US President Donald Trump's tariff policy. With global trade being altered by the Trump administration's new policies, major trading blocks are looking for new deals, including Australia and the European Union. But so far, trade talks have stalled, as neither is willing to alter their stance on naming rights on key agriculture products. The Australian government believes products should be named based on the actual commodity, while the EU wants to protect products based on geography. It says, for example, a product can only be called champagne if it is made in the Champagne region of France. For Australia to have greater access to the European market, the EU wants us to stop using terms such as prosecco and feta that are tied to geographical regions in Europe – something that Australian producers are reluctant to do. While talks are still in their infancy, AMP chief economist Shane Oliver said Australians could benefit from cheaper European goods if a deal materialised. 'For Australians, it will quite probably mean cheaper goods from Europe,' he said. 'I don't know how cars are being treated in this, but I do know some European cars are subject to tariffs and they could quite possibly be removed. 'It would be good news for Australian consumers via cheaper products from Europe and for Australian producers who get access to a bigger market globally at a time where it is becoming more difficult to sell to the US.' Australians imported $62.7bn worth of goods and $18bn worth of services from the EU in 2023, with tariffs ranging from 7 to 12 per cent. STICKING POINT After a seven-year effort for Australia to secure a free-trade deal with the EU, talks stalled in 2023 over differences in opinions for agricultural exports. But a meeting between the European Commission and Prime Minister Anthony Albanese at the Pope's inauguration helped revive the previously stalled chats. Since the post-Trump world, previous trade stumbling blocks, including the naming rights for products including feta and prosecco, are back on the table as Australia and the EU look for a trade deal. Dropping naming rights claims would be a major concession from the EU, but the Albanese government has argued it's critical to securing a free-trade agreement between the two. Trade Minister Don Farrell said a 'lot of things have changed' since negotiations broke down in 2023 due to sticking points in the agriculture sector. Mr Farrell said on Monday 'both Australia and Europe now realise that there's a priority and an imperative to get a free-trade agreement'. 'If other countries don't want to trade with you, well, that's fine,' he told Sky News. 'That's their decision, but if there are countries who do want to do trade with you, well, then you've got to go that extra mile to get an agreement over the line.' TRUMP TARIFFS CATALYST FOR NEW DEAL Mr Trump used a speech on April 2 to announce wide-ranging tariffs on just about every trading partner based on evening up the US trade deficit. Dubbed liberation day and 'it's no joke', every country, including Australia, faced a 10 per cent tariff, while 'cheating' nations were whacked with higher tariffs. Mr Trump subsequently paused all tariffs for 90 days to allow countries to work out trade deals with the US. Australia was given only the base rate, but Australian beef exports were singled out by Mr Trump during his speech. 'Australia bans – and they're wonderful people, and wonderful everything – but they ban American beef,' he said. 'Yet we imported $3bn of Australian beef from them just last year alone. 'They won't take any of our beef. They don't want it because they don't want it to affect their farmers. And you know, I don't blame them, but we're doing the same thing right now starting at midnight tonight.' While Australia fared better than the EU under the Trump tariff plan, Dr Oliver told NewsWire that both trading blocks were looking for new deals. 'They seemed to grind to a halt and what's happened now with the US tariffs being imposed on both countries – being a bigger threat to Europe compared to Australia of course – that's brought the two back together again,' he said. 'I think you'll see this around the world that countries that might find their exports to the US under threat might seek to come up with other nations as alternatives.' FARMERS PUSH FOR FREE TRADE Australian farmers have welcomed the potential of a trade deal with the EU but stressed the importance of improved agricultural market access and standing strong on matters such as geographical indicators for a variety of food products. NFF president David Jochinke said the ag industry supported Mr Albanese's comments. 'The deal on offer from the European Union simply wasn't good enough, limited market access and too many strings attached,' Mr Jochinke said. He said the central issues remained the same for Australian producers. 'This isn't just any trade deal, it'll shape trade between Australia and Europe for decades,' he said. 'That's why it must be fair and balanced, with real gains for Australian agriculture at its core.' LIMITED BENEFITS While key industries are set to benefit from a trade deal, Dr Oliver warns it's unlikely to help Australia's lagging economic growth. 'I don't think either Australia or the European Union desperately need this,' he said. 'Am I going to revise up my GDP growth forecasts as a result of this deal? Probably not.' But Dr Oliver did say a deal would help with confidence in the markets, lift certain industries and it's one of those things 'that are better to have than not'. 'I think psychologically, for Europe and Australia it's a positive, as it shows Trump is doing negative things but other countries around the world can get together and do positive things such as opening trade.' Sign in to access your portfolio
