Thank you for joining us today, and thanks to Daniel Ziffer for getting everything up and running this morning.
See you all tomorrow. Take care.
Thank you for joining us today, and thanks to Daniel Ziffer for getting everything up and running this morning.
See you all tomorrow. Take care.
These were the top 10 performing individual stocks today (by percentage change):
And these were the 10 biggest losers:
Here's how AAP is reporting today's decline:
"The local bourse has erased its gains for the month and recorded its seventh losing day out of the last eight sessions as sentiment turns increasingly bearish."
And if we step back and look at what the index has done over the past 12 months, we can see how the index is now trading back near its February level.
Trading has closed for the day, and the ASX200 index lost 37.4 points (-0.49%), to end the day on 7,628.2 points.
Earlier today we posted the main findings of an Australia Institute report into royalties (or lack thereof) collected from our gas exports.
The gas industry has taken issue with that report.
The Australian Energy Producers (formerly known as APPEA), have issued this statement from their chief executive Samantha McCulloch.
"Australia’s oil and gas industry is making a substantial and growing contribution to government revenues on top of the massive project investment and community spending the sector contributes to the economy.
"To claim that Australia’s gas resources are given away “for free” is a deliberate misrepresentation of a critical sector to Australia’s economy.
"The fact is that Australia’s oil and gas industry has invested more than $400 billion over the past decade or so to find and develop Australia’s natural gas resources.
"The gas industry will pay $17.1 billion in taxes, royalties and other charges this financial year, up from $16.2 billion last year.
"In addition to direct contributions to governments, the industry will spend $41 billion in Australia this financial year, a massive economic stimulus particularly for regional communities where the industry operates.
"The Australia Institute uses three-year-old figures from 2020-21 and misrepresents how the tax and royalty system works to encourage multi-billion investments in projects that play a critical role in Australia’s energy security and economy. As the costs of these investments are recovered, more revenues are flowing to state and federal governments.
"This includes through the Petroleum Resource Rent Tax (PRRT), which applies only to offshore oil and gas projects in Commonwealth waters. The Federal Budget highlights that PRRT collections grew to $2.2 billion last financial year and will total over almost $12 billion across the forward estimates.
"PRRT is only one of the many ways gas companies contribute to tax revenue – the industry also pays company tax, state royalties and other fees and charges.
"For example, company tax payments from the industry have risen almost 50% this financial year – from $8.8 billion to $12.7 billion.
"Meanwhile, onshore gas projects pay royalties to state governments. The Queensland Budget highlights that gas companies will pay over $7 billion in royalties across the forward estimates while Western Australian North West Shelf grants and royalties will total $1.6 billion.
My colleague Rachel Pupazzoni has just filed this very good analysis on the reasons why BHP's proposed takeover of Anglo American didn't happen.
If you've struggled to keep up with the different offers and rejections that have taken place in recent months, this piece explains everything.
It looks like the recent skirmish has ended. But the larger battle could continue.
With a little under 30 minutes to go before trading ends for the day, Tony Sycamore from IG has this to say about how the ASX has been going recently:
With just one trading day left before the month's end, the ASX200 is on track for its second consecutive monthly decline after falling in seven of the eight past sessions.
This week, the ASX200's falls accelerated following the release of a hotter-than-expected Australian inflation print (3.6% YoY vs. 3.4% exp).
The firmer inflation number has raised significant questions about the pace and sustainability of inflation's decline towards the RBA's target in "a timeframe" consistent with the RBA's strategy.
This uncertainty has been felt in the Australian interest rate market, which is now pricing in a 20% chance of a 25bp RBA rate hike before year-end after starting the week pricing in a 20% chance of an RBA rate cut.
A deepening rout in the US bond market has aided the yo-yo-ing in RBA expectations.
However, if next week's Q1 2024 GDP is more tepid than expected, a rate cut might soon be back on the agenda.
The preliminary expectation is for GDP to increase by 0.3% QoQ for an annual rate of 1.2%. This aligns with the RBA's revised forecasts in the May Statement of Monetary Policy.
Returning to equity markets, when the pendulum swings it is often without warning.
This time last week, the market was under the spell of super stock Nvidia, wondering how high its thumping earnings report might carry equity markets. This week, the market has fallen under the spell of the bond market genie and higher yields. The focus has turned to protecting P&L into month end along with managing the downside risks should we see firmer than expected US or European inflation data tomorrow evening.
My colleague David Taylor has sent this interesting info over for blog readers:
As of this afternoon financial markets are pricing in a 27% chance the Reserve Bank will hike interest rates again.
This is based on yesterday’s higher-than-expected April monthly CPI reading of 3.6%.
Earlier today Deutsche Bank’s chief economist, Phil O’Donaghoe, gave me a little head-spin with his forecast for the next move by the Reserve Bank.
““Bottom line,” O'Donaghoe wrote, “November cut is our base case, but an August hike is possible.”
I read it, was thoroughly confused, so I wrote to him with a please explain. Because inflation is either a problem, or it isn’t a problem, right?
This is what came back:
"Thanks for the very sensible question – and sorry for the confusion! I can assure you that as weird as that feels to read, it was just as weird to write.
“The labour market is cracking (unemployment is rising, growing signs of labour hoarding), and consumption is likely falling in real terms (Q1 national accounts next week to confirm that).
“But at the same time, Australian core inflation is accelerating just as peers are uniformly seeing a deceleration.”
“Against that backdrop, if inflation is materially above the RBA’s forecasts in Q2, I think there is a good chance the RBA will hike at the August meeting: recall that RBA is telling us they cannot “rule anything in or out” and that they are “vigilant” to upside inflation risks.”
“On the other hand, if Q2 inflation ultimately prints more or less in line with the RBA’s expectations, then I suspect the increasingly soft activity picture outlined above will give them more confidence that inflation will keep falling in the second half of the year, and they could therefore be cutting by November.”
“So to your point: you are absolutely right.”
“Given everything we know to date, Inflation either is a problem, or it isn’t.”
“Where Q2 CPI lands will answer that question definitively!”
So, that puts a lot of pressure on the Q2 CPI figures (which refers to the June quarter).
The ABS will be releasing those numbers on 31 July - which is two months away.
The RBA Board will hold its August meeting a week later.
See the RBA's meeting schedule below:
Master Builders Australia has responded to the news that dwelling approval declined again in April.
It says the news doesn't bode well for the Albanese government's housing ambitions.
Here's part of its press release:
Newly released Australian Bureau of Statistics data on new building approvals has shown yet another month of decline, with detached house approvals down one per cent and higher density dwellings 7.5 per cent down on a year ago.
Master Builders Australia’s Chief Economist Shane Garrett said the new data covering the month of April this year shows a concerning trend which, if it were to continue, would see us fall well short of the National Housing Accord target.
“The new National Housing Accord kicks off in less than five weeks’ time and envisages 240,000 new homes each year," he said.
"However, the past 12 months have seen less than 163,500 new home building approvals across Australia.
"Just 60,600 higher density dwellings were approved over the year to April. This is the lowest total for any 12-month period since September 2012 almost 12 years ago.
“The challenge is massive, not impossible, but requires a 47 per cent increase in the volume of new home building output,” Mr Garrett said.
Denita Wawn, Chief Executive of Master Builders Australia, says governments across the country have to do more to get construction activity moving.
“We have to rapidly increase housing production to reach Housing Accord targets, but some in government have left the handbrake on," she said.
“The hurdles are clear to everyone, approval delays, tradie shortages, material cost inflation, out of touch industrial relations changes, inefficient regulation and more.
“We’re beginning to sound like a broken record, but the situation is critical.
"If we don’t clear the obstacles stopping builders from getting on with the job, we won’t have any hope of reaching the 1.2 million new home target by 2029.
“The community is crying out for more housing supply, but if we don’t urgently clear the way for builders to get on with the job, demand will continue to dwarf supply, and Australian’s will continue to feel the impacts of the housing crisis,” Ms Wawn said.
A little earlier today, the Bureau of Statistics released new data on dwelling approvals.
It showed the total number of dwellings approved fell 0.3 per cent in April (light blue line in the graph below).
That comprised a 1.6 per cent decline in approvals for private houses (dark blue line), and a 1.1 per cent decline in approvals for private sector dwellings excluding houses (orange line).
On a state-by-state basis:
Total dwelling approvals fell in:
But they increased in:
Victoria was flat in April.
Meanwhile, approvals for private sector houses decreased in:
But they increased in:
Western Australia (3.5 per cent)