1h agoThu 5 Sep 2024 at 2:38am
Market snapshot
ASX 200: +0.2% to 7,967 pointsAustralian dollar: flat at 67.29 US centsWall Street: Dow Jones (+0.1%), S&P 500 (-0.2%), Nasdaq (-0.3%)Europe: FTSE (-0.4%), DAX (-0.8%), Stoxx 600 (-1%)Spot gold: +0.1% at $US2,498/ounceBrent crude: +0.4% at $US73/barrelIron ore: -0.8% to $US92.90/tonneBitcoin: +0.4% to $US57,779
Prices current around 12:30pm AEST
Live updates on the major ASX indices:
3m agoThu 5 Sep 2024 at 4:30am
Optus and TPG regional mobile network deal gets green light
The competition watchdog will not oppose three proposed regional mobile network sharing agreements between Optus Mobile and TPG Telecom.
In the regional coverage areas agreed upon, Optus will use certain TPG spectrum to supply mobile services and Optus will in turn provide TPG with network services.
TPG will decommission most of its sites in the coverage area, while some will be transferred to Optus.
In a statement, the Australian Comepeition and Consumer Commission said TPG and Optus will continue to operate their own mobile networks in metropolitan areas.
It said it had considered the effects of the agreements on competition for retail and wholesale mobile services in Australia and found that the agreements “are unlikely to substantially lessen competition”.
43m agoThu 5 Sep 2024 at 3:50am
That’s it for questions
Question time has just wrapped up and Michele Bullock has finished talking.
Now is the perfect time to direct you to read my colleague Gareth Hutchens’ piece breaking down the speech.
You can catch up on anything you missed here.
49m agoThu 5 Sep 2024 at 3:43am
‘Treasurer doing his job, I’m doing mine’
Ms Bullock has faced a number of questions along a similar theme, going back to those comments from earlier in the week from the Treasurer.
When asked point-blank if she was “at war with the government”, Ms Bullock responded: “He’s [Jim Chalmers] doing his job and I’m doing mine.”
53m agoThu 5 Sep 2024 at 3:40am
Does the government need to be doing more?
“My job is to focus on what I can do, which is only the interest rate,” she said.
“I think all governments are conscious of it, because quite frankly all of their constituents are focused on it.”
55m agoThu 5 Sep 2024 at 3:37am
Bullock asked about Treasurer Jim Chalmers’s comments
Ms Bullock has been asked what she thinks about Treasurer Jim Chalmers’s comment that the RBA’s high interest rates were “smashing the economy”.
“I undertand people are hurting from high interest rates,” she said.
“But as I tried to set out in the speech, it’s actually inflation that is causing trouble for people, and it’s affecting everyone.
Monetary policy is working, she says, but reiterates we need to see the results in the inflation numbers.
“As I said in the speech, if we don’t get inflation down, it’s bad for everyone,” she said.
“That’s the job I’m focusing on, that’s the job the board is focusing on.”
When pressed what she thought of the comments from Mr Chalmers, she said: “I have no comment to make on the comments.”
1h agoThu 5 Sep 2024 at 3:33am
Bullock is now taking questions
The first question to Michele Bullock was, if households are spending less according to the national accounts, which were released yesterday, why are the RBA not adjusting down their forecasts?
Ms Bullock gave a lengthy answer but the conclusion was that “we need to see the results in inflation before we can [bring down interest rates]”.
1h agoThu 5 Sep 2024 at 3:30am
‘Small share of borrowers currently at risk of falling behind on their mortgage’
Ms Bullock said we tend to focus on households with mortgages because debt has the potential to amplify and transmit stress across the financial system.
But a key point to make here, she said, is that despite the pressure on household budgets, only a small share of borrowers were currently at risk of falling behind on their mortgage repayments.
“Key reasons for this are that the labour market has been strong, people have been able to find and stay in work and many have been making adjustments to their spending, particularly on discretionary items,” she said.
1h agoThu 5 Sep 2024 at 3:28am
‘More people than usual are seeking support from community organisations’
As she has flagged before, Ms Bullock acknowledges that the RBA only have one instrument — the interest rate — and “it is blunt”.
“But just as inflation is felt differently by various groups in the community, so too are interest rate moves,” she said.
“We therefore need to pay close attention to conditions facing different parts of the community, including the most vulnerable.”
She said those with mortgages were feeling the squeeze on their cash flows not just from high inflation, but also from the increase in interest rates that had occurred in response to it.
1h agoThu 5 Sep 2024 at 3:24am
‘Experience of cost-of-living pressures varies’
Another way to come at the question of why getting inflation down is a priority is to “look at the effects that high inflation has had on people over the past three years”, Ms Bullock said.
“Every Australian feels the effects of inflation, but people have different patterns of spending and incomes, and so their experience of cost-of-living pressures varies,” she said.
She said the experience of individual households varied widely, but younger households and lower-income households had been particularly affected by cost-of-living pressures overall.
“They are often budget-constrained and have less scope to reduce their spending on discretionary items to balance their budgets,” she said.
“They also might have less scope to reduce spending via trading down to cheaper items within the same category if they were already purchasing lower cost items.
“Moreover, they typically have smaller savings buffers and so less scope to use savings to maintain their current standard of living.”
1h agoThu 5 Sep 2024 at 3:20am
Why is bringing inflation down so important?
Ms Bullock has now turned her attention to the impact of inflation and interest rates on households.
“We know the restrictive monetary policy settings that are necessary to bring inflation down are causing hardship to some households and businesses,” she said.
“We are very conscious of that. In fact, we spend a lot of time trying to understand how interest rates settings are affecting households and businesses.
Ms Bullock points to previous high inflationary periods, such as in the 1970s and 1980s, as examples of the problems it can cause and said high and variable inflation “is harmful because it raises uncertainty and makes it hard to plan for the future”.
“It can distort economic activity, affecting decisions about investment and employment. Ultimately hurting productivity and household incomes,” she said.
1h agoThu 5 Sep 2024 at 3:17am
Housing costs and market services driving inflation
Ms Bullock has used a graph to illustrate how most components of the Consumer Price Index basket were growing faster than usual through 2022 and 2023.
However, over the past 18 months, goods price inflation has declined substantially as supply disruptions associated with the COVID-19 pandemic and war in Ukraine have subsided and global demand for goods has eased.
Currently, she says, the key drivers of inflation are housing costs and market services inflation, which remain above their average levels and have been easing only gradually.
“On the housing side, this reflects both construction cost growth and strong increases in rents. Year-ended growth in advertised rents is still high, reflecting pressure from a rebound in housing demand and limited supply response,” she said.
She also acknowledged that despite a gradual easing over the past 18 months, “the labour market remains relatively tight, with labour availability still a constraint for some businesses and job vacancies elevated”.
1h agoThu 5 Sep 2024 at 3:14am
Bullock once again flags it’s ‘premature to be thinking about rate cuts’
Ms Bullock has acknowledged that the central forecast for inflation was based on cuts in the cash rate starting later this year, which was the path implied by the market.
She said that’s why the board released the message following its meeting that it is “premature to be thinking about rate cuts”.
“If the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term,” she said.
For reference, at her post-rates meeting press conference in August, she said “near-term” meant six months.
Ms Bullock is now preparing to dig into the thorny issue of inflation.
1h agoThu 5 Sep 2024 at 3:12am
Bullock highlights uncertainty in RBA’s forecasts
RBA governor Michele Bullock has begun her speech by reflecting on the Reserve Bank’s August board meeting, where they made the decision to keep interest rates on hold at 4.35 per cent.
The RBA is focused on trying to navigate the so-called “narrow path”, she says, which is bringing inflation back to target in a reasonable timeframe while trying to preserve employment.
While inflation has fallen substantially since its peak, she says, it is “still some way above” the midpoint of the 2–3 per cent target range.
In the RBA’s central August forecast, underlying inflation is expected to be back in the target range by the end of next year, and to approach the midpoint in 2026. But “there is substantial uncertainty around this central outlook” she says.
She points out that many things could happen that could result in inflation being above or below the central forecast and the Board needs to be alert to these possibilities in thinking about the future path of interest rates.
“Given the starting point of high inflation and a relatively tight labour market, and that low and stable inflation ultimately supports our full employment objective, our highest priority has been and remains to bring inflation down,” she said.
The issue of uncertainty appears to be a special focus of the RBA at the moment. If you cast your minds back, Deputy Governor Andrew Hauser made a similar point in a speech called Beware False Prophets last month.
During the address in Brisbane, he hit out at market commentators who have “extraordinary certainty” about what’s going to happen in the economy.
Let’s see if it comes up again today.
1h agoThu 5 Sep 2024 at 3:09am
Why is Bullock speaking at this event?
As my colleague David Chau flagged earlier, it’s a long-standing tradition of RBA governors to appear at the Annika Foundation and deliver a speech.
The foundation was set up in 2005 to raise funds for the purposes of supporting research into adolescent depression and suicide.
Ms Bullock agreed to continue the practice after taking over the role of governor last year, following in the footsteps of Glenn Stevens (from 2006 to 2016) and Phillip Lowe (from 2016 to 2023).
Last year, Mr Lowe delivered his last speech as governor at the event, where he conceded some mistakes, claimed some major successes, and warned of the changing nature of inflation.
1h agoThu 5 Sep 2024 at 2:59am
Coming up: Michele Bullock to deliver speech
In about 10 minutes, RBA governor Michele Bullock will address the Anika Foundation in Sydney.
Afterwards, she will take questions.
I’ll be bringing all the developments to you right here in the blog.
But if you also want to watch it in real time, you can do so via our Youtube link below:
1h agoThu 5 Sep 2024 at 2:48am
ASX slightly higher in afternoon trading
It’s shaping up to be a better day of trade on the ASX after yesterday’s slump, which was the worst sell off since August 5.
The ASX 200 is slightly higher this afternoon, up 16.6 points (0.2%) to 7,967.10 as of 12:40pm.
Despite the recovery, only four out of 11 sectors are in the green, led by real estate and technology.
These are the top movers so far:
And these were the bottom movers:
2h agoThu 5 Sep 2024 at 2:14am
Could dividends have anything to do with it?
Could the reason for Septembers drop in the stock market simply be that there is a large number of Ex Dividend dates….that usually results in a drop equal to the dividend that takes time to recover.
– allan
Possibly Allan. It’s really hard to say exactly what’s behind the “September effect”.
There are a whole range of theories out there. One research paper has even explored the idea of school holidays playing a role.
The authors analysed school holiday data from 47 countries and documented a strong link between the vacation period and lower market return.
But as my colleague David Chau mentioned earlier there’s actually no definitive reason.
2h agoThu 5 Sep 2024 at 1:58am
Could the ‘September effect’ apply all year?
October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.
– Mark Twain
Mark Twain you might be onto something. Just last month, we experienced a couple of days of wild market volatility. And then it went away as quickly as it arrived. A good reminder that it can really happen at any time.
If you’d like a refresher on what happened, you can catch up with this piece
2h agoThu 5 Sep 2024 at 1:43am
Volvo abandons 2030 target for electrical vehicles
Remember the surge of interest in electric vehicles in 2021 and 2022?
It prompted car manufacturers to go big on plans to make EVs a significant part of their future offerings, including Swedish automaker Volvo.
But recently car makers have been forced to scale back their ambitions for electric cars and now Reuters is reporting Volvo will join them, scrapping its target of going all electric by 2030.
It comes as major automakers experience a slowing demand for EVs partly due to a lack of affordable models and the slow roll-out of charging points.
At the same, they are also bracing for the effects of European tariffs on electric cars made in China.
It is now aiming that by 2030:
Between 90% and 100% of cars sold to be fully electric or plug-in hybrid models.Up to 10% would be so-called mild hybrids, where electric power only supplements the combustion engine
Volvo sells a mix of electric and hybrid cars, and had until now remained steadfastly committed to its plans to only sell fully electric cars by 2030.
