Thanks for being with us today.
Hope those of you who have a day off tomorrow for Australia Day enjoy it.
I'll be working as usual.
Tune in tomorrow morning to read my exclusive story!
Thanks for being with us today.
Hope those of you who have a day off tomorrow for Australia Day enjoy it.
I'll be working as usual.
Tune in tomorrow morning to read my exclusive story!
Price current around 4.45pm AEDT
The Aussie stock market rose for a fifth consecutive day, hitting a three-week high before the Australia Day long weekend.
The S&P/ASX 200 index closed 0.5 per cent higher at 7555.4.
Coles supermarket share price was slightly down, as the ACCC begins its inquiry into suspected price gouging in the sector. The retailer closed 0.89 per cent lower.
Domino's Pizza dropped 31 per cent as a profit warning triggered downgrades.
Australia's consumer watchdog says its inquiry into alleged price gouging by the supermarkets will take an entire year to complete.
The inquiry will also examine competition in the supermarket sector and how it has changed since the Australian Competition and Consumer Commission's (ACCC's) inquiry in 2008.
"We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures," ACCC Chair Gina Cass-Gottlieb said.
"When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the checkout."
"We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to government."
Following the ACCC's 2008 inquiry, Coles and Woolworths provided enforceable undertakings to the ACCC to remove restrictive tenancy provisions that may have prevented shopping centres from leasing space to competing supermarkets.
The ACCC's investigation identified more than 700 potentially restrictive leases.
The ACCC expects to publish an issues paper in February seeking views on the key issues it will consider in its inquiry.
An interim report will be provided to the Australian government later this year, and the final report is due to be provided early next year.
Between $7 billion and $11 billion of the nation’s cash is being used in the shadow economy to fund tax avoidance or other illegal purposes such buying illicit drugs, according to the Reserve Bank.
In a new research paper in its latest Bulletin, published on Thursday morning, the RBA suggests the majority of $100 billion of banknotes – between 55 per cent and 80 per cent – is being hoarded in Australia or overseas.
It estimates between 9 per cent and 26 per cent (between $9 billion to $26 billion) of all cash is being used to make legitimate transactions to pay for goods and services. This is down 5 per cent since the start of the pandemic as more consumers shift to digital payments.
But about 7 per cent to 11 per cent ($7 billion to $11 billion) of Australia's cash is being in the "shadow economy" illegally — that is to avoid tax or used to buy illicit drugs.
"Banknotes can be used to make legitimate payments, but they can also be hoarded, lost or used to facilitate transactions in the shadow economy," the RBA says.
The RBA also estimates about 5 to 9 per cent of cash ($5 billion to $9 billion) is "lost".
"There will inevitably be some banknotes that have been lost, destroyed, forgotten about or are sitting in numismatic currency collections, both domestically and internationally. While these are still considered as banknotes on issue, they are unavailable for spending," it said.
As the share of payments made in cash plummets, the companies whose job it is to collect cash from businesses such as banks and supermarkets, are becoming financially unviable.
That's left major banks and the RBA working to find a solution to keep companies like Armaguard, which recently merged with Prosegur, afloat.
"Fewer banknotes used for transactions will lead to lower cash processing volumes, which further increases financial pressures across the wholesale banknote distribution industry," the RBA said.
Read more about the declining use of cash and whether users may be made to pay to use cash in my story here:
The federal government's adjusted tax package is a bit more stimulatory than the original version, but only marginally, according to Westpac chief economist Luci Ellis.
That means it won't be the factor that could tip the Reserve Bank towards keeping rates high.
In an economic note she suggests that relative to the originally legislated Stage 3 package, the government's changes redistributing the benefits to lower-income and middle-income taxpayers, could cause them to spend more.
"Past research suggests that, on average, these households tend to spend more out of every dollar of extra income than higher-income households do," she says.
"The changes therefore redistribute more of the tax relief to people who are more likely to spend more of it."
But she says by retaining the 37 per cent bracket, "the system is not flattened out as much as originally planned".
"This means that more households will still face some fiscal drag," she says.
"The RBA would therefore not need to do as much in the face of strong income growth, should that emerge."
"The big-picture issue is that households have been squeezed in recent times by a rapidly rising tax take.
"Real household incomes have been falling. Tax relief in the second half of the year goes some way to reducing the tax drag on household incomes."
While the governments changes this week alter the distribution of the benefits, she argues "the macroeconomic impact of this – relative to the package as originally announced – is marginal".
"We do not expect that this will affect the RBA's view of the inflation outlook or the future path of the cash rate," she says.
"It is also important to remember that these tax cuts will not take place until 1 July. By that stage, inflation is likely to be within striking distance of the RBA's 2 to 3 per cent target.
"Any surprises around the effect of the tax package on household spending will only emerge after that. What matters for near-term monetary policy decisions is whether the RBA currently thinks that the outlook has changed, not whether things turn out differently once we get to that point.
Monthly inflation has surprised a little on the downside since the RBA's last forecast round, and data on real spending has also been softer in recent weeks.
"For the announced changes to the tax package to push the RBA in the direction of raising the cash rate again, the changes would have to offset these downside risks and signals," she said.
"It would be hard to make a case that a second-order distributional change to a known large tax package more than offsets these other factors.
"This would still be the case even if the RBA were only focusing on the differences in marginal propensities to consume, rather than channeling their inner octopus and considering all the offsetting factors noted above."
Shares in Domino's Pizza, posted a record drop on Thursday, after the retail food outlet operator withdrew its fiscal 2024 outlook and its first-half profit forecast missed expectations.
The stock slumped as much as 30.8% to $39.60, its lowest since August 2019, and was the top laggard on the benchmark index, which was up 0.3% as of 1pm AEDT.
After market hours on Wednesday, Domino's said it expected first-half preliminary net profit before tax between $87 million and $90 million, hurt by weaker-than-expected network sales in Asia and Europe.
"With improvements still required in H2 to grow order volumes... any previous guidance for FY24 performance, de facto or otherwise, is no longer in effect," Domino's said.
It had earlier said it expected earnings in fiscal 2024 to be significantly higher than 2023 as it continued to cut costs.
The company's first-half forecast was 12% to 15% below Visible Alpha consensus estimates, prompting brokerages to slash their ratings and earnings estimates.
Analysts at Citi downgraded the stock to "Neutral" from "Buy" due to increased uncertainty around Japan and France outlook, which together constitute about 39% of the group's stores.
The brokerage also trimmed its earnings per share estimates by 8%-19% for fiscals 2024 to 2026.
"We expect the magnitude of the deterioration in SSS (same store sales) in Asia and Europe to overshadow positive comments around improving average unit economics in ANZ and Europe."
Jefferies analysts also downgraded Domino's to "Underperform" from "Hold", noting that "market patience is running thin".
Morgan Stanley, however, kept its "Overweight" rating, expecting the company to deliver earnings growth in the second half.
Domino's share price had slumped about 44% and 11% in 2022 and 2023, respectively, and Thursday's decline brings 2024 year-to-date losses at nearly 30%.
China's central bank has announced a deep cut to bank reserves, in a move that will inject about 1 trillion yuan ($US139.45 billion) into the banking system and send a strong signal of support for a fragile economy and plunging stock markets.
The central bank's announcement, coming just as stock markets were closing on Wednesday, led to a bounce in benchmark stock indexes and the yuan, even as analysts said more policy measures were needed.
The People's Bank of China (PBoC) said it was making a 50-basis points (bps) cut, the biggest in two years, in the amount of cash banks must hold as reserves, effective from February 5.
More importantly, PBoC Governor Pan Gongsheng said the bank would release policies on improving commercial property loans potentially on Thursday night, giving hope to investors who have been frustrated by China's efforts to put a floor under a real estate sector that underpins consumption and household wealth.
The first cut in banks' reserve requirement ratio (RRR) this year comes as the world's second-largest economy struggles to mount a strong post-COVID recovery amid a housing crisis, local government debt risks and weakening global demand.
It also comes just days after China's benchmark indexes hit five-year lows as even the last hopeful investors waiting for clarity and an eventual economic rebound appeared to be giving up on the $US9 trillion market.
"It's a welcome step, but it's not going to be a game-changer," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
"There are still questions about the extent to which the 'National Team', and various institutions can try to pull together to try to support the market and start up the buying of stocks and draw a line under the sell-off there."
Price current around 11:50am AEDT
Live updates on the major ASX indices:
Australia's population has tipped over 27 million, around 18 years earlier than the milestone was predicted.
The 624,100 population increase over the past 12 months is equivalent to adding the population of Tasmania (572,800) in just one year.
This annual growth is 41 per cent larger than the previous record when the population increased by 442,500 in 2009.
Migration has surged Australia's population post-pandemic.
Read more from Tessa Flemming.