Oil breaks US$100, Wall Street retreats and bond yields rise, inflation is becoming the market’s biggest risk again Global markets are starting Thursday in a more defensive position. Brent crude has broken above US$100 a barrel , U.S. Treasury yields are pushing higher, and Wall Street fell for a third straight session as investors reassess whether central banks may need to keep tightening rather than easing. For Malaysian investors, the key chain today is increasingly clear: Oil → inflation → interest rates → bond yields → USD/MYR → Bursa valuations. 30-second market snapshot Market / Asset Latest 🇺🇸 S&P 500 7,636.36, -0.48% 🇺🇸 Dow Jones 52,380.66, -0.77% 🇺🇸 Nasdaq 26,253.34, -0.64% 🇲🇾 FBM KLCI 1,714.34, virtually flat 💵 USD/MYR ~4.06 🇺🇸 U.S. 10Y Treasury ~4.84% 🇺🇸 U.S. 2Y Treasury ~4.42% 🥇 Gold ~US$4,396/oz 🛢️ Brent crude US$101.21/bbl 🛢️ WTI crude US$96.05/bbl ₿ Bitcoin ~US$79,300 🇯🇵 Nikkei ~64,760, -0.6% this morning Brent jumped about 3.4% Wednesda...
Australia's economy remained in low gear in the June quarter, with household spending acting as a drag on growth amid high borrowing costs and persistent inflation. The data from the Australian Bureau of Statistics showed a lack of momentum, with government expenditure emerging as the primary driver of growth.
Key Takeaways:
Stagnant Economic Growth: Real GDP growth was a modest 0.2% for the third consecutive quarter, slightly below market forecasts of 0.3%. Annual growth slowed to 1.0%, reaching levels last seen during the 1990s recession, apart from the pandemic distortions. Household spending, which constitutes half of GDP, fell by 0.2%, reflecting reduced expenditure on overseas travel and a continued low savings rate of 0.6%.
Inflationary Pressures Remain High: Despite the Reserve Bank of Australia (RBA) raising interest rates to a 12-year high of 4.35% to combat inflation, underlying inflation remained elevated at 3.9% last quarter. Measures of inflation within the GDP report showed price pressures, with domestic demand inflation running at 4.2% for the year. Productivity fell by 0.8% in the quarter, a worrying sign for the RBA, which bases its forecast of inflation returning to the target range of 2%-3% by 2026 on improved productivity.
Outlook for Economic Recovery Uncertain: While the RBA anticipates a pickup in growth to 1.7% by the fourth quarter, current indicators show a lack of strong consumer spending, despite government tax cuts and subsidies. Retail sales remained flat in July, and recent data suggests only a gradual increase in demand. Financial markets are betting on a 90% chance of a rate cut in December, despite policymakers signaling reluctance due to persistent inflation concerns.
Treasurer Jim Chalmers characterized the economic data as "soft and subdued," aligning with expectations. However, given the current trajectory and limited impact of fiscal measures on demand, the prospects for a robust rebound remain uncertain, barring any pre-emptive rate cuts by the RBA.
Comments
Post a Comment