Australia Rate Shock Puts RBA's Radio Silence Under Scrutiny
That turmoil, along with local data skewed largely to the downside, sent money market expectations sliding toward a rate cut, even as inflation stayed within the Reserve Bank of Australia 's 2% to 3% target and the labor market remained resilient.
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Yahoo
26 minutes ago
- Yahoo
ASX flat despite RBA's shock move
Australia's sharemarket closed flat on Tuesday despite the Reserve Bank shocking markets by holding the official cash rate at 3.85 per cent and more details emerging from Donald Trump's tariff plans. The benchmark ASX 200 index closed at 8590.7 just 1.4 points higher, or 0.02 per cent, on a seesawing day of trading. The broader All Ordinaries also eked out a tiny gain, up 2.30 points or 0.03 per cent. The Australian dollar jumped on higher interest rates and is now buying 65.33 US cents. On a mixed day of trading, just four sectors were higher, with seven finishing in the red. The gains were led by telecommunications, the major banks and consumer discretionary stocks. Three of the big four banks finished higher with CBA gaining 0.83 per cent to close at $179.28, NAB gained 0.64 per cent to $39.29 and ANZ finished in the green up 0.27 per cent to $30.21. Westpac was the outlier, slipping just 0.03 per cent to $33.47 to be the only major bank to end in the red. Wesfarmers gained 0.53 per cent to $83.49, Aristocrat Leisure gained 0.30 per cent to $67.84 and Eagers Automotive jumped 0.64 per cent to $18.73. Going against market expectations, the RBA held the official cash rate at 3.85 per cent, although left the door open for future rate cuts. VanEck head of investments and capital markets Russel Chesler said markets seemed to be throwing caution to the wind with their expectations. 'A rate cut is generally good for markets, as it reduces the cost of capital and thus encourages business growth – particularly for small caps, which are typically more leveraged,' he said. 'The additional rate easing, while mild, also suggests business input costs should improve, which is beneficial for mid and small caps that tend to have lower pricing power. 'However, the tight labour market should not be overlooked, with wages continuing to put downward pressure on profits.' Australia's market followed a weak lead in from Wall Street overnight after US President Donald Trump began sending letters to key trading partners, including Japan and South Korea who will both face 25 per cent tariff rates. In total 14 letters were sent with Mr Trump sharing screenshots of signed form letters dictating new tariff rates to the leaders of Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Tunisia, Bosnia and Herzegovina, Indonesia, Bangladesh, Serbia, Cambodia and Thailand. senior financial market analyst Kyle Rodda called it a 'quick punch in the guts' as the July 9 US trade deal deadline approaches. 'Market participants were anticipating a flurry of trade deals with some trading partners and a handful of letters announcing new tariff rates on others,' he wrote in an economic note. 'So far, only the letters have been published, and their contents made investors' stomachs sink.' In company news, shares in DigitalX soared 34.15 per cent to $0.11 after the digital asset manager announced a $20.7m strategic investment to expand its bitcoin-focused strategy. Pizza maker Domino's also finished in the green up 2.39 per cent to $18.45 after broker Morgans revealed a buy rating for the business stating 'we think the risk reward looks attractive from here.' It comes after shares have fallen by 47 per cent over the last 12 months, including a more than 11 per cent drop last week after chief executive Mark Van Dyck announced plans to leave his role just before Christmas. Anti-drone technology company DroneShield also jumped 4.07 per cent to $2.56 after telling the market it had been awarded an $11.7m follow-on research and development contract by a Five Eyes Department of Defence. This follows the completion of a $9.9m contract with the same defence customer back in July 2023.
Yahoo
44 minutes ago
- Yahoo
Couple's $800,000 problem as rate cuts fuel property frenzy: 'Not even competitive'
Mortgage holders were disappointed by the Reserve Bank of Australia's (RBA) decision to keep the cash rate on hold this week, but there's a silver lining for property buyers. Aussies had been facing stiffer competition for homes as recent cuts gave more people the confidence to enter the market, pushing property prices higher. Ashleigh Pullin, 28, and her partner James Mashiter, 37, have been looking to buy their first home since April but have found themselves outbid by predominantly older buyers with more cash at hand. They anticipated more interest rate cuts in July would continue to put upward pressure on property prices. The Melbourne couple told Yahoo Finance they received pre-approval for a $760,000 home loan with a 5 per cent deposit after spending five years saving up a deposit. 'We've put in four offers in total since that time and all of them have been unsuccessful,' Pullin said. 'You get very disappointed because you see the house you put an offer in then goes for another $30,000, $40,000 over, and you're not even competitive.' RELATED Tough way Aussie couple saved $60,000 to buy first property Commonwealth Bank, Westpac reveal major payment change for millions of customers CBA, NAB, ANZ reveal $200,000 move borrowers making after RBA interest rate cuts The couple plan to buy through the federal government's First Home Guarantee Scheme, which allows eligible people to buy with a 5 per cent deposit and avoid lenders' mortgage insurance. The scheme means they are subject to an $800,000 property price cap, which they say is also hampering their ability to compete. The couple said they felt pressure to get into the market now before further RBA interest rate cuts push up property prices further. While the RBA held the cash rate steady this week, it signalled rates could be lowered in August should inflation remain on track. 'We were looking at places that were four-bedroom, two-bathroom and two garages and that was comfortably within what we could afford, it was going for $760,000 to $790,000,' Mashiter said. 'Now we're struggling to find a three-bedroom place with two bathrooms. Anything with two bathrooms has gone over $800,000 every time. 'It's been a significant change in what you can afford just over the last couple of months.' Pullin said the couple may need to keep moving further out towards the Yarra Ranges and Dandenong Ranges if prices continue to brokers Loan Market reported a 53 per cent year-on-year increase in pre-approval numbers following the RBA's February and May interest rate cuts. Since the start of the year, the group found that someone earning $120,000 per year would have seen their borrowing capacity increase by $27,000. Melbourne-based mortgage broker Jacob Decru said buyer sentiment had improved quarter on quarter and the fear of missing out was building among buyers. "Owner-occupiers in Melbourne feel the market has bottomed out and further interest rate cuts are going to lift prices,' he said. "There are more buyers wanting to purchase now, but fewer properties on the market compared to last year.' Ray White data found new property listings in May were 11.8 per cent down across the country compared to the same month last year. Australian housing values rose by 0.6 per cent in June, according to Cotality, marking a fifth straight month of growth. This upswing began in February when the RBA first started cutting interest rates, with expectations of further cuts providing more support. REA Group senior economist Anne Flaherty said the decision to hold the cash rate may "slow the pace of price growth seen in the months following the February and May cuts". AMP chief economist Shane Oliver said he expects the RBA will take a more gradual approach to easing, with the next cuts forecast for August, November, February and May. "The more gradual pace of easing could have the effect of moderating the upswing in the property market in the near term," he said. The bank revised its home price growth forecasts to 5 to 6 per cent from around 3 per cent, but Oliver said the risks to this could be back on the downside. Pullin said the couple was now doing everything they could to make themselves more attractive to sellers, including writing them personal letters. "We just need to try and get in now," she in retrieving data Sign in to access your portfolio Error in retrieving data
Fast Company
an hour ago
- Fast Company
What is vibe-based budgeting? Over half of Gen Z and millennials are doing it
To say Americans are grappling with economic uncertainty is an understatement. From boomerang tariff policies to the high cost of living, inflation, and mass layoffs, many people are increasingly worried about the economy and their ability to stay afloat. One way that's affecting Americans? Their budgeting habits—and many are now engaging in what's called 'vibe-based budgeting,' according to a report from Intuit Credit Karma. Here's what to know. What is vibe-based budgeting? New data from Intuit Credit Karma showed that 44% of Americans have engaged in 'vibe-based budgeting'—adjusting their spending and financial habits based on 'how the economy feels,' even if their personal financial situation hasn't actually changed. Over half of younger Americans admitted to budgeting this way (56% of Gen Z and 57% of millennials). That mindset is tied directly to recent news about the economy, both on and off social media, according to Intuit Credit Karma. The data showed many Americans believe that prices are climbing rapidly (44%), their finances are unstable (34%), and a recession is just around the corner (28%), with 61% reporting they are more anxious about the economy now than they were a year ago. A bleak picture but a better reality In contrast to that bleak economic picture, when asked to drill down on their own finances, half of those surveyed (51%) reported having a positive monthly cash flow, with nearly three-quarters (72%) saying it's actually improved or stayed the same over the past six months. However, 48% said that media coverage and changing economic conditions have made them second guess their financial standing. In short, the findings show a gap between how those surveyed feel about the state of the economy and the future, versus how they are actually doing financially. It also showed that their anxiety over the economy is making them more deliberate about how they manage their money, with 45% of those concerned about the economy reporting they have cut back on non-essential spending like eating out, and 38% avoiding new debt or loans. The good news is that those who have adjusted their budget have a more optimistic outlook; 38% said they expect their financial situation to improve in the coming year. The Intuit Credit Karma findings are based on data from a Qualtrics online survey that ran last month from June 13 to June 17, among 1,058 adults aged 18 and older.
