The Australian share market has ended the day higher after a rally on Wall Street, while the Australian dollar remains at a two-year low.
The S&P 500 and the Nasdaq Composite rose in holiday-thinned trading after a stopgap government funding bill averted a US government shutdown.
Here's how the session played out, plus insights from our specialist business reporters, on the ABC markets blog.
Disclaimer: this blog is not intended as investment advice.
Key Events
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ASX closed up
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IMF warns of rate hikes as billions expected to be spent over Christmas
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Blockbuster Merger
Market snapshot
- ASX 200: +0.2% to 8,220 points
- Australian dollar: -0.4% to 62.24 US cents
- S&P 500: +0.7% to 5,974 points
- Nasdaq: +1% to 19,764 points
- FTSE: +0.2% to 8,102 points
- EuroStoxx: +0.1% to 502 points
- Spot gold: +0.1% to $US2,616.56/ounce
- Brent crude: +0.4% to $US72.91/barrel
- Bitcoin: -0.1% to $US93,757
Price current around 2:15pm AEDT
Live updates on the major ASX indices:
Christmas Day
Dear readers,
Just a reminder that there won't be a live blog tomorrow.
Wishing you a very Merry Christmas!
ASX closed up
The Australian sharemarket has finished the day in a late rally, helped by strong gains in education stocks, while investors digested minutes of the central bank's December policy meeting.
The ASX 200 index edged 0.2% higher to 8,220. The benchmark closed 1.7% higher on Monday.
Minutes of the Reserve Bank of Australia's (RBA) December board meeting released on Tuesday showed the central bank judged the upside risks to inflation to have diminished and the downside risks to the economy to have strengthened.
The RBA had turned dovish in its policy earlier this month, holding rates but keeping the door open to a cut in 2025. Investors have priced in a 55% chance of policy easing in February while a cut is fully priced in by April, and lower rates could hurt the earnings of the financial sector.
The financials index gained 0.3%, with shares of the big four backs up between 0.2% and 0.7%.
Miners lost 0.4% on the back of declining metal prices, with BHP dropping 0.4%.
Gold stocks fell 1% after bullion prices eased weighed down by a robust dollar. Shares of Northern Star Resources and Evolution Mining declined about 0.7% and 0.4% each.
Energy firms gained 0.7% in thin trading ahead of the Christmas holiday on Wednesday.
Sector heavyweights Viva Energy and Beach Energy gained around 2.3% and 1.1% each.
Tech stocks tracking their U.S. peers which closed higher on Monday gained 0.3%.
In company news, ASX-listed shares of Arcadium Lithium rose as much as 7% after its shareholders approved $US6.7 billion Rio Tinto takeover. Rio shares down 0.8%.
St Barbara's shares plummet up to 34.4%, potentially marking the worst trading day since 1990, following a significant tax bill from the Papua New Guinea government linked to its Simberi operations.
IMF warns of rate hikes as billions expected to be spent over Christmas
The International Monetary Fund (IMF) has warned the Reserve Bank should consider tighter monetary policy if progress on lowering inflation stalls.
The IMF points to an increase in government spending and a tighter-than-expected jobs market as risks to inflation.
All eyes will be on the release of the December-quarter inflation data next month.
Blockbuster Merger
Household car makers Nissan, Honda and Mitsubishi have reached an agreement to explore a possible three-way merger amid sales declines and increased competition.
If successful, the new coalition will become the world’s third largest car manufacturer behind Toyota and Volkswagen.
ABC finance reporter David Chau says such a deal was 'unthinkable' only years ago.
Reading the tea leaves on the RBA minutes
OK, so a lot of this discussion is couched in coded messages. Here's some thoughts on the what the RBA is trying to say, in simpler language.
"Growth in GDP had continued to be subdued in the September quarter and had been a little softer than expected."
This is a bit of an understatement.
"Household consumption had picked up somewhat in the September quarter and early indications were that consumer spending had risen further in October and November. However, the extent to which this reflected a sustained recovery in consumer demand, rather than a pull-forward in expenditure in response to emerging patterns of promotional activity, was not clear."
Are people spending again, or was it just 'Black Friday' sales bringing their Christmas shopping earlier? We don't know.
"After careful consideration of these factors, members agreed that it was appropriate to leave the cash rate target unchanged at this meeting. They noted that the data received since the previous meeting had not been sufficient to shift the central forecast for inflation or the labour market materially at this stage."
The RBA board don't think inflation it coming down fast enough to loosen (lower) interest rates. They also want to see more people unemployed. Brutal, but this is their consistent view.
"Relative to this central path, members judged that the risk that inflation returns to target more slowly than forecast had diminished since the previous meeting and that the downside risks to activity had strengthened. A consideration underpinning this judgement was reduced momentum in GDP growth over the year to the September quarter. Members noted that consumption growth had been weaker than expected over this period and that it was not clear whether the apparent strengthening in consumer spending in October and November would be sustained. Given the weakness in private demand and the slow pace of job creation in the market sector, members were alert to the risk that the unemployment rate could increase by more than expected if labour demand in the non-market sector were to slow abruptly."
Aaaah, we may have pulled the interest rate lever too hard and crushed the economy. We'll know more in February.
"While members judged the upside risks to inflation to have diminished, they discussed several factors that meant it was too soon to conclude with full confidence that inflation was moving sustainably towards target."
Uncertainty about the labour market, whether it was just ‘Black Friday’ sales pushing consumer demand and persistence in global services price inflation is also a factor.
"Members reiterated their earlier view that they had minimal tolerance to accommodate a more prolonged period of high inflation than currently envisaged. At the same time, if the future flow of data continued to evolve in line with, or weaker than, their expectations, it would further increase their confidence that inflation was declining sustainably towards target. If that were to occur, members concluded that it would, in due course, be appropriate to begin relaxing the degree of monetary policy tightness. If the data came in stronger, that process could take longer. They noted that, in making this decision, they would be guided by how the evolving data shaped the economic outlook and the associated risks."
We're going to wait and see before we relax interest rates.
"In finalising the Board’s statement, members affirmed that monetary policy would need to be sufficiently restrictive until members are confident that inflation is moving sustainably towards target."
We won't stop. Election or not, low GDP or not, the only thing that will impact interest rates is if the board is confident that there is a long-term shift to trimmed-mean inflation being between 2-3%, the 'target band'
This is what they've been saying for a while, seemingly ignoring the long 'lag' between lifting rates and that constriction hitting the real economy.
"Returning inflation to target remains the Board’s highest priority and it will do what is necessary to achieve that outcome".
RBA minutes say inflation "still too high", weighing against rate cuts next year
The Reserve Bank left its cash rate unchanged at its final 2024 meeting on December 9-10, at 4.35%
It's been there all year, causing eye-watering repayments for the 1/3 of Australians with mortgages (also, other debts) and removing a lot of money out of the economy.
Based on the minutes just released, they're happy with the settings and don't foresee any interest rate cuts soon.
"Turning to considerations for the monetary policy decision, members noted that much of the data received since the previous meeting had been broadly in line with the forecasts published in November; where differences had occurred, outcomes had, on balance, been somewhat softer. Taken together, these data had not been sufficient materially to alter the staff’s central outlook for the economy, though they had shifted the risks surrounding the outlook.
"Underlying inflation was still too high, underpinned by persistently high services price inflation. The staff’s most recent forecasts did not see inflation returning sustainably to the midpoint of the target until 2026. While recent information on inflation in housing services had been a little softer than expected, on its own this did not materially change the medium-term outlook for inflation."
Inflation could stop falling in Australia: IMF
The International Monetary Fund has warned that inflation in Australia could stop falling, potentially leading to higher-for-even-longer interest rates that adversely impact consumption and investment.
The IMF said persistent labor market tightness, stronger than expected fiscal impulses and lower spare capacity than currently assessed could contribute to stalling the disinflation process.
The fund also said, conversely, weaker-than-expected growth or a faster-than-projected increase in unemployment may prompt the Reserve Bank to lower interest rates sooner.
"External risks include weakness in major trading partners, geoeconomic fragmentation affecting global trade, and rising shipping costs and volatile energy and food prices amid escalating geopolitical tensions, which could also complicate the disinflation process," the fund said in a press release.
"Australia’s role in the Pacific continues to enhance regional stability through aid and remittances, while labor migration also helps alleviate Australia’s domestic capacity constraints and skills shortages."
The IMF noted that Australia’s economic growth slowed to 1.0 percent (y/y) in Q2 2024 from 1.9 percent a year prior, with private consumption growth dropping to 0.5 percent (y/y).
Growth is projected to pick up gradually, from 1.2 percent in 2024 to 2.1 percent in 2025.
Labor market conditions have been softening gradually, with unemployment at 4.1 percent in September 2024, while job creation remains strong.
Unemployment is projected to rise gradually to 4.5 percent.
Trimmed mean inflation is expected to return to the RBA’s target range by end-2025 and the mid-point in 2026 – with headline inflation more volatile reflecting the impact of temporary energy rebates.
ASX flat
The Australian share market has given up early gains, trading fairly flat at 8,198 points, by 11:37am AEDT.
Gains in education is offsetting losses in financials and mining.
What, fuel in the country is cheaper than the city?
Even if it might not feel like it, the data says regional petrol prices were cheaper than metropolitan capitals in the past week.
There's a 24c a litre gap between Brisbane and regional QLD. As in, it's more expensive in town.
Find where you live here.
Data from the Australian Institute of Petroleum shows average prices of 1 litre of unleaded fuel(Australian Institute of Petroleum)
* Data for the epic span of the Northern Territory has regional prices higher than for the capital, Darwin.
Petrol up 5.8c/litre in the past week
Hi team,
Just jumping in with some backward-looking petrol prices.
Each week the Australian Institute of Petroleum puts out data about the price of our fuel, and what you're paying at the pump.
It says the average national price of a single litre of unleaded fuel was 187.0c for the week to Sunday (December 22).
This is a jump from the previous week (181.2c) but lower than the average for the past 12 months (188.8c).
The petrol market is complex: we not only roll off the world crude oil price, but then what the market in Singapore dictates and then – when it finally gets to bowsers in Australia – there are different price cycles in major cities.
The eye-opening assessment of our competition watchdog is below.
Surprisingly in the data – and many country people will be boggled by this – the national metropolitan average last week was 190.1c, higher than the national regional average of 180.7c.
An estimated $86b is expected to be put on credit card this holiday season
Australians are expected to put an estimated $86 billion on credit cards across the holiday season of November, December and January, according to Canstar, sparking fears some borrowers won’t have the funds to pay this debt off before they get hit with interest charges.
Analysis of RBA figures by Canstar shows credit card debt attracting interest charges has risen every January since 2015, as Australians notoriously struggle to clear their debt within the interest-free period.
The latest credit card statistics for October 2024 show that Australians are collectively shelling out over $8.8 million in interest charges a day on a collective credit card debt of $17.45 billion, at the average interest rate of 18.51% according to the RBA payments statistics.
This daily amount could climb even higher in January if shoppers can’t pay back their silly season spending, which includes Christmas shopping, the Black Friday and Boxing Day sales and the summer holidays.
Interest-free days designed to catch some shoppers out
Most credit cards offer customers time to pay back their purchases before charging interest, known as “interest-free days”.
The amount of time given to customers can vary from card to card but also depends on where a customer is in their billing cycle. For example, for a purchase made on the first day of a 30-day billing cycle, the customer could have up to 55 days to pay that purchase back.
However, if it was on the last day of the cycle they would only have 25. On a card offering “up to 44” interest-free days they would have just 14 days.
Anyone with money owing on their card is likely to find their interest-free days are null and void until they clear their credit card in full.
Big bank rewards cards now only offer up to 44 or 45 days interest-free
Many credit cards offer customers up to 55 days to pay the amount owing on their card in full, however, shoppers using a big four bank rewards card only have up to 44 or 45 days to clear their debts.
While NAB and Westpac have not changed these recently, CBA and ANZ cut the maximum number of interest-free days from 55 to 44 in May and November this year, respectively.
ASX opens up
The Australian sharemarket has opened slightly higher, helped by strong gains in the education sector.
The ASX 200 was up 9 points or 0.1% to 8,209, by 10:19am AEDT.
Arcadium Lithium (+6.3pc), IDP Education (+5.8pc) and Liontown Resources (+4.7pc) were the top movers.
Here are the top and bottom movers at open.
(Reuters)
Foxtel had a pay TV monopoly, now it's been sold
It was a deal that was a long time coming.
Sports streaming service DAZN will become Foxtel's new owner in a deal worth $3.4 billion.
In its heyday Foxtel was one of Australia's most profitable media companies, reaching nearly one in every three households across the country.
Some Foxtel customers pay above $100 month to watch sports and movies on demand. Why keep doing this if you could individually subscribe to other streaming services at a far lower price?
S&P 500, Nasdaq gain in choppy trading as most megacaps move higher
The S&P 500 and the Nasdaq Composite rose on Monday in holiday-thinned trading after a stopgap government funding bill averted a US government shutdown, aided by gains by many of the so-called Magnificent Seven tech stocks.
With megacap stocks having outsized influence on markets, their performance during a week in which many investors take time off will be even more pronounced.
Meta, Nvidia and Tesla were all trading more than 2.5% higher, with Google parent Alphabet and Amazon also in positive territory.
Should the gains of the benchmark indexes hold, Monday's session would mark the third straight increase for the Nasdaq Composite and a second advance in three sessions for the S&P 500. Stocks fell last Wednesday in a selloff triggered by the US Federal Reserve signalling a slower pace of rate cuts next year.
After a solid run since the November presidential election, Wall Street's rally hit a bump this month, especially after the US Federal Reserve forecast just two 25-basis-point rate reductions for 2025 — down from its September view of four cuts — and raised its annual inflation outlook.
A cooler-than-expected inflation report on Friday helped US stocks recoup some losses. However, overall market sentiment was still cautious, said Thierry Wizman, strategist at Macquarie.
Money markets expect roughly two 25-bps reductions in 2025, which would bring the benchmark rate to a range of 3.75% to 4.0%, from a range of about 3.50% to 3.75% two weeks ago.
"It's a Monday with very few catalysts to drive (broad market) sentiment, and we're going to have low volume, likely volatile trading as we work our way out of this year," said Art Hogan, chief market strategist at B. Riley Wealth.
Trading volumes are expected to thin, with US stock markets closing early on Tuesday and shut for Christmas on Wednesday.
The United States Congress passed spending legislation early on Saturday, minutes after the funding's expiration, which could have disrupted everything from law enforcement to national parks ahead of the busy Christmas travel season.
ICYMI: Dan Ziffer's Finance Report
What's going on with our dollar?
A couple of months back, when the Australian dollar burst through 0.69 US cents, there was no shortage of highly paid currency traders and economists predicting a quick flirtation with 0.70 US cents before heading onwards and upwards.
All that's suddenly changed.
A weak Chinese economy, American threats to impose punishing trade tariffs, a poor medium-to-longer-term outlook for our key exports and a sluggish economy are likely to keep the Australian dollar under pressure through 2025, threatening to send it to 20-year lows.
Here is the analysis from Chief Business Correspondent Ian Verrender.
Boxing Day sales poised to break records despite cost-of-living pressures
The Australian Retailers Association and Roy Morgan have forcast that shoppers will splurge almost $1.3 billion on Boxing Day itself and $24.7 billion for the entire sales period, which is set to be the biggest on record.
This year's Boxing Day spending is expected to see a "modest" increase from last year.
Food, household goods and clothing, footwear and accessories categories will make up the bulk of spending.
Find out why by clicking the link below (and this is from me!).
ASX to fall
Good morning and welcome to Tuesday's markets live blog, where we'll bring you the latest price action and news on the ASX and beyond.
A rally on Wall Street overnight sets the tone for local market action today.
The Dow Jones index gained 0.7 per cent, the S&P 500 up 0.4 per cent and the Nasdaq Composite up 1.6 per cent.
ASX futures were down 15 points or 0.2 per cent to 8,183 at 7:16am AEDT.
At the same time, the Australian dollar was down 0.1 per cent to 62.45 US cents.
Brent crude oil was down 0.1 per cent, trading at $US72.85 a barrel.
Spot gold dropped 0.4 per cent to $US2,611.10.