RBA deputy governor says Australia not ready to follow Canada and ECB into rate cuts, ASX gains — as it happened (2024)

• ASX 200:+0.5% to 7,860 points (live values below)
• Australian dollar:+0.1% to 66.72 US cents
• Nikkei: -0.1% to 38,684 points
• Hang Seng: -0.6% to 18,356 points
• Shanghai: Flat at 3,049 points
• S&P 500:Flat at 5,352 points
• Nasdaq:-0.1% to 17,173 points
• FTSE:+0.5% to 8,285 points
• EuroStoxx:+0.7% to 524 points
• Spot gold:-0.1% to $US2,373/ounce
• Brent crude:+0.1% to $US79.94/barrel
• Iron ore:+0.4% to 109.05/tonne
• Bitcoin:+0.7% to $US71,183

Prices current around 4:40pm AEST.

Live updates on the major ASX indices:

Broad-based gains saw thebenchmark ASX 200 index gain 0.5%by the close of trade.

The standout sector was education, which is justIDP Educationon the ASX 200. The company rebounded 5.7% to $15.33 after a recent sell-down on fears about student visa changes.

The biggest driver of the index higher was themining sector, up 0.9%, whileretail stocks and industrialsall gained around 0.7%.

Energy had the smallest gain of less than 0.1%.

And that's your bloomin' lot for the week. The ASX is closed on Monday for a public holiday, so enjoy some gardening leave.

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It's the turn of the US to be again the centre of economic attention, after the European Central Bank stole its thunder briefly last night with a rate cut.

Tonight the Bureau of Labor Statistics will release the latest non-farm payroll numbers.

"The week was marked by softer-than-expected job openings in April, a significantly lower-than-expected May ADP report, a surprise decline in the pace of unit labour costs from 4.7% to 4% and an unexpected jump in US weekly jobless claims," noted Ipek Ozkardeskaya from Swissquote Bank.

"The consensus of analyst estimates on Bloomberg bet that the US economy may have added around 180K new nonfarm jobs last month, the unemployment rate is seen steady near 3.9% and wages growth may have slightly accelerated on a monthly basis.

"A soft jobs report should support the dovish Fed expectations and further weigh on the US dollar."

As it is, Ms Ozkardeskaya pointed out that the ECB ended up being rather hawkish in its rate cut, warning there certainly wouldn't be a follow up in July.

"The market no longer prices a full rate cut by October," she wrote.

"The ECB will remain data-dependent and probably Fed-dependent as well, without saying it aloud, because even though cutting the rates before the Fed was not expected at the start of this year and was courageous, an excessive dovish stance from the ECB could weigh on the euro and jeopardise the bank's efforts to fight inflation."

Great comment James. I think you might be onto something...

Australia's central bank — unlike, for example, the Bank of England — has a clear dual mandate not only to keep inflation in a low and stable range (2-3%) but also to try and maintain full employment (which the RBA currently views as an unemployment rate a bit under 4.5%, or higher than it is now).

The RBA has also raised interest rates later and by less than many other developed economy central banks.

But RBA deputy governor Andrew Hauser says, so far, that gentler approach has worked.

"I don't want to say I think that Australia is on its own," he said.

"I think every central bank is seeking to bring inflation down in a way that minimises the losses to employment and to output. We have a particular weight on that strategy.

"And, to be honest, so far that strategy has worked. It's a narrow path, but it has worked."

Philip Lowe may have left the RBA many months ago now, but it looks like his description of the narrow path will live on at the bank for sometime — until we get to the end of that path or we fall off it.

The new RBA deputy governor Andrew Hauser might win a few fans from this kind of reality check delivered to a gathering populated by a lot of financial heavyweights.

"We all have the same fundamental challenge, which is that inflation has been sticky on the way down, in particular services prices, inflation," he said.

"And we'll I'm sure talk about this in the context of Australia, Canada and Europe and many other countries — UK, obviously, where I've just come from — have the same challenge.

"Your colleague earlier said it was a tough time for central bankers.

"I don't think people should feel too sorry for the central bankers — we're well-paid, we have an interesting and important job to do.

"The people that are challenged and struggling are the people who are finding it difficult to make ends meet, and who are affected by our decisions but are most importantly, Ross, affected by high inflation."

New RBA deputy governor Andrew Hauser was very chatty in his conversation with Sky's Ross Greenwood, but remained within the fairly strict bounds of comfort for what central bankers generally discuss.

"I think it's for democratic elected governments to make fiscal decisions and it's for central banks to do the job that they were given to do by the public, which is to bring inflation down to the target level and to keep it there."

So, less than 20 minutes after it started, RBA deputy governor Andrew Hauser's chat with Sky's Ross Greenwood has wrapped up.

After that flurry of discussion, I am going to go back over my transcript to see if there were any gems I missed on the first pass.

Andrew Hauser comes to the Reserve Bank direct from the Bank of England.

He says his newly adopted home is significantly outperforming the country he recently left.

"The employment gains in Australia have been impressive 2.7 million jobs created in the last decade, that compares to 2.5 [million] in the UK in an economy three times as large.

"It is probably fair to say that there is some secret sauce here that it is worth being particularly protective of."

He didn't say what that sauce is, or the recipe for it.

RBA deputy governor Andrew Hauser said the Reserve Bank will do what it needs to so that inflation expectations don't become stuck at high levels.

"We have so far managed to get to the point where inflation expectations are well anchored despite the fact, as you say, we are very consciously seeking to bring inflation back at a gradual rate to protect those employment gains."

For those who've missed it, Canada's central bank cut interest rates earlier this week by a quarter of a percentage point.

The European Central Bank followed up with a 0.25 of a percentage point rate cut last night.

But, speaking at a Sky News event, new RBA deputy governor Andrew Hauser said Australia's central bank isn't in the same position yet.

"In Canada, the case is straight at fairly straightforward," he said.

"Their interest rates were higher than ours. Their inflation rate is lower than ours, and their unemployment rate has picked up quite a bit more substantially than ours.

"I think if you took those data out of Canada and you plugged them into the Australian context, you might well see a different policy stance."

As for Europe, former Bank of England official Mr Hauser said there was no guarantee rates would keep falling.

"When I talk as I do to some of the people on the ECB board, they're not all sure where rates are going next," he said.

"So they've been keen, I think, to start the rate cutting cycle to show that they're independent of the US.

"But whether that goes a lot further and where it goes from here I'm not so sure."

Indeed's Asia-Pacific economist Callam Pickering has analyst some additional ABS data out today on the health of the jobs market.

That data showed that the number of Australian job vacancies fell 4.3% to 365,000 in the March quarter. Job vacancies were down 17.4% over the past year.

"Tight monetary policy continues to slow the Australian job market, with the job vacancy rate falling for six consecutive quarters," Pickering wrote.

"Australia's job vacancy rate eased to 2.3% in the March quarter. That's down from a peak of 3.1% but is still well above the 1.4% average rate from 2010 to 2019.

"Competition for talent may have eased but by no means has it returned to normal levels. Skill and talent shortages are still common and many businesses continue to find recruitment challenging."

"Australia's job vacancy rate remains highest in the mining sector at 4.6%. Mining consistently struggles to fill roles due to the remote nature of many of those opportunities.

"The vacancy rate also remains high across the utilities sector (3.3%), accommodation & food services (2.9%) and healthcare (2.6%). Persistent shortages across these sectors can undermine service provision and quality, which is particularly concerning in areas such as utilities and healthcare."

The data also revealed that 6.7% of workers, or 974,000 people, held two or more jobs.

"While the number hasn't moved much in the past year, it remains well above the historical 5 to 6% range that was common in the first two decades of this century," Pickering observed.

"Multiple jobs are most common among women (7.3% of workers), compared to men (6%). Women are most likely to have a second role in healthcare & social assistance and education, whereas for men they are most commonly working multiple construction jobs or in administration.

"There is a good chance that the share of workers with multiple jobs continues its gradual upward trend this year. Cost-of-living pressures continue to make things difficult for Australian households, creating the need for extra work to manage mortgages, rents, electricity and food costs."

Seems like the standard working week is going out the door for more and more Australians as they scramble to make ends meet.

An interesting note from investment bank UBS's economics team.

They reckon there's a strong chance headline inflation could be driven back below the top of the Reserve Bank's 2-3% target band due to the 0.75%pts that government subsidies will take off prices such as electricity, rents and medicines.

"For Q3-24, the impact of subsidies is so large, that headline CPI in y/y terms could even temporarily dip to a 2-handle (UBSe: 0.4% q/q; & 2.9% y/y)," they note.

But don't expect that to trigger a rate cut.

"However, RBA Governor Bullock's comments this week indicated the RBA would view this as 'noise', and not react with a rate cut.

"Further ahead, our forecast for Q4-24 was revised down a tick to 3.3% y/y (was3.4% y/y), to still be a tick above consensus (mkt: ~3.2%).

"However, this is well below the RBA's May-24 SOMP which lifted their forecast to 3.8% y/y, albeit this was before incorporating the release of several Government budgets."

UBS warns there will be pay-back in the inflation numbers once the subsidies eventually wear off.

"Meanwhile, further ahead, we now significantly raise our forecast for Q4-25 to 3.3% y/y (was 3.0% y/y); which is now further above consensus (mkt: ~2¾% y/y), and the RBA (2.8% y/y).

"However, we assume that a significant portion of Government subsides are not 'extended again'; which would push up inflation in 2025."

Nonetheless, the UBS team, like most Australian-based economists, sees the RBA cutting rates earlier than what many on the global financial markets are pricing in.

"Markets are not pricing the first cut until ~mid-25. UBS see the first -25bps RBA rate cut in Feb-25, followed by a modest easing cycle of -25bps per quarter, to 3.35% by Q4-25."

My colleague Kate Ainsworth had a useful summary of some highlights from RBA governor Michele Bullock's Senate appearance on Wednesday in this article.

I would have loved to be a fly on the wall at Nine's board meeting this morning.

According to the Nine-owned AFR, the company's directors had an already scheduled catch-up this morning, but it just so happened to be hours after the news and entertainment company's chair Peter Costello had an encounter with a journalist from The Australian at Canberra Airport, captured on camera.

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The AFR reports that the meeting's agenda was updated to include discussion of the incident.

Mr Costello has denied assaulting the journalist, Liam Mendes, saying the reporter tripped over an advertising placard while walking backwards filming him.

"There is no assault," Mr Costello said.

"I did not lay a finger or a fist or anything else on him."

My Canberra-based colleague Isaac Nowroozi has a full write-up on the incident.

You are 100% right about the very interesting article from RN's Late Night Live about the farming families dominating world agriculture.

It is definitely worth a read.

Considering the March quarter GDP figures out on Wednesday, showing Australia's economy at its weakest ebb (outside the pandemic lockdowns) since 1991, it is surprising to read that small businesses are apparently doing OK.

That's the finding from Judo Bank's May Purchasing Managers Index report for small and medium enterprises (SMEs).

"Most SMEs are in good financial shape, although we are seeing insolvencies rise," the report noted.

"A more assertive ATO seems to be tipping many businesses over, but the outright numbers remain small.

"First-time insolvencies are running above a 12,000 annualised rate in early 2024, the highest in a decade, but a very small proportion of the 2.6 million businesses in Australia."

Unsurprisingly, the picture is mixed across different industries and regions.

"Consumer-facing businesses are doing it tougher than others, with those focused on discretionary spending the hardest hit in the last 12 months.

"SMEs are still seeing weak discretionary consumer spending right up until May, with hospitality operators across the eastern seaboard noting a further step down in activity in April and May.

"Common feedback from pubs and restaurants is that the per-person spend is down."

Judo Bank's economists say some of these struggling businesses may get a break if the tax cuts due in about three weeks' time cause households to loosen their purse strings a bit.

"For consumer-facing businesses that are under pressure, much depends on how the consumer responds to tax cuts and cost of living relief in 2024/25.

"These Government stimulus measures should bring the most significant lift in real household disposable incomes (outside of the pandemic) in a decade."

Small businesses may be gambling on this, with both new orders and hiring intentions both at the strongest level in two years, according to the index.

The positive momentum is still ticking along on the ASX 200, with the local market 0.3% higher to 7,845 points as of 12:20pm AEST.

Since trading started this morning, the sectors have shifted around a little bit — more of them are lower now than they are higher.

In fact, only five of the sectors are now in the green: materials (+0.9%), consumer discretionary (+0.8%), utilities (+0.6%), energy (+0.5%) and consumer staples (+0.2%).

At the other end, real estate and technology are both down by 0.4%, while healthcare is 0.3% lower. Financial and industrials are both down 0.1%.

As for the top performing individual stocks, it's mostly gold miners leading the charge as the price steadies at $US2,390 an ounce.

The top five performers so far:

• Regis Resources +4.3%
• Boss Energy +3.6%
• Genesis Minerals +3.5%
• IDP Education +3.4%
• Newmont +3.3%

As for stocks with the greatest declines:

• Life360 -4.8%
• Nanosonics -2.4%
• Orora -2.1%
• Inghams -2%
• Downer -2%

The Federal Court has fined casino and gaming group SkyCity $67 million for breaching anti-money laundering laws.

The fine comes after AUSTRAC launched proceedings against SkyCity's casino in Adelaide, with the court finding that the casino failed to comply with anti-money laundering and counter-terrorism financing rules.

Additionally, the court found that SkyCity failed to carry out proper checks on 121 customers.

"SkyCity's failure to comply ... over many years allowed high-risk customers to move millions of dollars through the casino, in ways that made the source and ownership of the funds unclear," AUSTRAC said in a statement.

Acting CEO of AUSTRAC, Peter Soros, said the court's ruling is proof that all businesses, including casinos, need to take their anti-money laundering obligations seriously.

"If casinos and other gambling entities have weak anti-money laundering systems and controls, they leave themselves vulnerable to criminal exploitation," Mr Soros said.

"Today's result shows AUSTRAC is prepared to take action when businesses, including casinos, fail to comply with the legislation.

"Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity."

The order from the Federal Court comes after SkyCity and AUSTRAC agreed that a $67 million penalty was "appropriate" back in May.

In addition to the $67 million fine, SkyCity is also required to pay AUSTRAC's costs of $3 million.

Earlier this week I baulked at the site of blueberries going for $10 a punnet. But after reading this piece by our colleagues at Landline I should have jumped at that price!

ABC Landline heard of blueberry punnets selling for $16 at some independent stores in Sydney, $15 in Karratha, $13 in Mt Gambier, and were missing from major supermarket shelves in Darwin this week.

They've got to the bottom of the berry price spike(it's a supply chain & weather combo):

The chief executive of Perfection Fresh, Michael Simonetta, said there were a combination of factors driving prices up including the weather.

"We are transitioning from the southern production states like Tasmania [ending their harvest] to the northern regions [starting harvest], and those areas in the north like Bundaberg and the Sunshine Coast have been a little cooler than average and the crop maturity this year is behind," he said.

"So prices at the moment are a little bit inflated and will continue that way for another two to three weeks before we see a reduction to more normal pricing."

A little bit inflated?? $16 for a punnet is more than a little inflated imo.

Strawberry lovers are also being warned that price rises are on the way, bad weather in Queensland is the culprit there.

Landline will have more details this Sunday!

Bon appétit!

The ASX 200 is trading higher this morning in the opening moments of trade — it's up 0.2% to 7,841 points as of 10:30am AEST.

(You can get live updates by expanding the post at the very top of the blog.)

It's a strong performance across the sectors, with eight out of the 11 trading in positive territory. Financials and real estate are both leading the charge (+3.4% and +3.1% respectively).

The only three sectors in red are energy (-1.9%), materials (-1.2%) and technology (-0.6%).

As for top performing stocks:

• Genesis Minerals +3.1%
• Ramelius Resources +3.1%
• Bellevue Gold +3%
• Capricorn Metals +3%
• Newmont +3%

While the biggest declines:

• Life360 -5.4%
• Lendlease -1.6%
• Charter Hall -1.2%
• Kelsian -1.1%
• Pilbara Minerals -0.8%