2 May 2025
Investor sentiment bounces
Markets
- Local and global stocks rose this week helped by strong US company reporting season results and less tensions on US tariffs as optimism rose on potential concessions and deals.
- In local stock news, Telix Pharmaceuticals shares fell sharply after its new drug was rejected by the US Food and Drug Administration.
- NEXTDC shares surged after Microsoft flagged it would expand data centres to keep up with A.I. related demand.
- Global oil prices fell sharply after Saudi Arabia signalled a move to producing more crude and expanding its market share. The news also came after the weak US economic growth print.
- Gold prices fell as investor sentiment improved, resulting in a shift from safe-haven assets to risk assets (equities).
Economics
- Australian headline inflation rose by 0.9% in the March quarter, with the annual rate holding steady at 2.4%, coming in above expectations. The RBA’s preferred trimmed mean increased by 0.7% in the quarter with the annual rate easing to 2.9%. Data was in line with the RBA’s forecasts.
- Australian private sector credit rose by 0.5% in March to be 6.5% higher through the year. The pace of annual growth has remained steady for the last four months.
- Australian import prices rose by 3.3% on higher petrol prices and a weaker Aussie dollar. Export prices rose by 2.1% driven by iron ore and non-monetary gold. This will detract from economic growth in the quarter.
- US economic growth contracted by 0.3% in the March quarter, coming in slightly worse than expected. Data showed a surge in imports as businesses attempted to get ahead of higher tariffs, with inventories also lifting sharply.
- US private payroll jobs rose by 62,000 in April, coming in well below expectations of a 115,000 increase. Personal income jumped 0.5% in March with personal spending up 0.7%, both above expectations. The employment cost index also lifted in the March quarter.
- The US central bank’s preferred inflation measure came in flat in March, below expectations, with the annual rate easing to 2.6% from February’s 3%.
- A key US consumer sentiment index fell sharply in March, against expectations for an even larger drop, to its lowest level since July 2022. US consumer confidence fell to a near five-year low in April on growing pessimism about the economic outlook.
- A key US manufacturing index dropped sharply in April to the weakest reading since May 2020.
- US job openings fell in March from February, coming in below expectations.
- Two prominent US house price gauges showed prices rose in February. Pending home sales rose by 6.1% in March, coming in well above expectations.
- Australian home prices across eight capital cities rose by 0.2% in April. National home prices have now reached a new record high, following three consecutive months of growth.
- The Euro area economy expanded at a better than expected 0.4% in the first quarter, though this comes pre-tariff impact. Germany and France grew in line with expectations, while Italy did better than economists had forecast.
- The Bank of Japan kept interest rates unchanged at 0.50% as expected.
- The Chinese government laid out policies to aid its exporters affected by the trade war, including loan support for troubled firms and measures to boost domestic consumption.
- China’s factory activity showed the biggest contraction since December 2023.
Politics
- China’s government is considering suspending its 125% tariff on some US imports. US President Trump suggested another delay to reciprocal tariffs was unlikely and he won’t be dropping levies on China without something large in return.
- US Treasury Secretary Scott Bessent said trade discussions with Asian countries are moving along very well. He specifically called out both Japan and India, but no mention of China. Bessent has apparently also set a July 4 goal to pass the administration’s multi-trillion-dollar tax cut package.
- US President Trump is set to ease the impact of his auto tariffs agreeing to changes sought by the industry to lift some levies.
- The Australian Stock Exchange will review requirements for shareholder approvals in mergers and acquisitions following James Hardie’s $14 billion deal in March to take over AZEK. The deal also assists James Hardie with shifting their primary listing to the USA.
- Russian President Putin declared a new temporary ceasefire proposal from May 8-10, drawing criticism from the White House as they seek to negotiate a permanent end to hostilities. Ukraine said it’s prepared to abide by an immediate full halt in fighting for at least 30 days.
- Tensions rose on the Indian / Pakistani border following the deadly attack in Kashmir last week.
- China removed sanctions against European lawmakers amid speculation that the US tariffs could lead to a reset of Beijing’s relations with the EU.
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