Latest news with #DanielleEcuyer
ABC News
30-06-2025
- Business
- ABC News
Stocks climb 'wall of worry' as ASX 200 gains 10 per cent over financial year 2025
For all the turbulence on the Australian stock market in recent months, you wouldn't have known it on June 30. "Who doesn't love the stock 'pump' on the last day of the financial year …" financial commentator Danielle Ecuyer posted on X. It was a strong session on Monday, before a late wobble saw the S&P/ASX 200 post a modest rise of a third of a per cent — cementing a 10.2 per cent gain for the financial year. Over the last five days, the local benchmark index has gained 0.4 per cent and is currently about 1.1 per cent off its 52-week high. The Australian share market performed remarkably well in financial year 2024/25 — the ASX 200 index began the financial year at 7,750 index points and closed it 8,542. "The ASX 200 has had a surprisingly good year … at a time of heightened geopolitical uncertainty," Ms Ecuyer told ABC News. The past 12 months have seen major conflicts continue, including wars between Russia and Ukraine, Israel and Hamas, and most recently Israel and Iran. The latter also saw incredible price volatility in oil markets, with the price of Brent crude surging 14 per cent at one point, only to fall back by the same amount following the declaration of a ceasefire. Any major oil price surge had the potential to spark a renewed inflation outbreak, interest rate hikes and a global recession. It would have taken nerves of steel to hold a long position in the equity markets — that is, hold onto shares rather than sell out to reduce risk — and yet, many did. Many also piled into stocks after they fell. "The mega trends of AI and data centres boosted the technology sector as one of the stand-outs," Ms Ecuyer said. The Australian share market also became known throughout financial year 2025 as something of a "safe haven" investment opportunity. Investors from the United States, in particular, piled into Australian banking stocks. "Defensive buying from US and overseas investors pushed banks and large cap stocks like Wesfarmers and CommBank to all-time highs," Ms Ecuyer said. "Gold miners shot the lights out, up over 50 per cent, while slowing China growth and [macroeconomic impact of] tariffs dragged down materials and energy stocks into negative territory." But overall? This is especially the case, Ms Ecuyer said, considering US President Donald Trump's "Liberation Day'" global markets sell-off and a domestic economic backdrop, which has not been so positive for many Australian cyclical stocks. "It has been a good year all round," Marcus Today senior portfolio manager Henry Jennings agreed. "Close to record highs despite the volatility and the uncertainty." Mr Jennings observed intense interest in a number of different stocks and something of a dislocation between the fundamental performance of companies, the economy, and the stock market. CBA shares have gained more than 46 per cent over the past 12 months. However, Mr Jennings expects the gains to be "more limited" from here for the banking giant, as money shifts out of Australian financials, which he said had been seen as "defensive" for a period, and back into US technology stocks. The Australian financials index finished up 23 per cent for the financial year. AMP's head of investment strategy Shane Oliver helps manage billions of dollars worth of superannuation funds. Rather than investors relishing in a bullish trading environment, where buying enthusiasm overwhelms the markets, investors have been climbing a so-called "wall of worry". "Trump has tried to build a new world order and upset the global trading system with big tariff hikes and … conflict in the Middle East threatened to disrupt oil supplies," Dr Oliver said. "Fortunately, Trump backed down on the worst of his tariffs for now and the Middle East threat has fizzled seeing US shares rise to a new record high. "Australian shares [closed the financial year] just 0.9 per cent below their record high and on track for another financial year of strong returns for 2024-25 helped by strong profit growth in the US and central bank rate cuts elsewhere, including in Australia." The gains could continue in the near term, with Dr Oliver noting that July is normally a strong month for shares. Every Australian with superannuation benefits from this rise in the value of share markets. Indeed, an average wage earner would have added or earned close to $20,000 on to their superannuation balance over the past 12 months, assuming they were all-in on Australian shares. The superannuation sector itself is now worth well over $4 trillion. From today, the superannuation guarantee rate will increase from 11.5 per cent to 12 per cent. But the risks to financial markets haven't evaporated — including a bond market sell-off that is showing no signs of slowing. The yield on US 30-year Treasury bonds has been trading above 4.8 per cent now for two months. Yields rise when bond prices fall. Bond prices have been falling as global investors start to question the sustainability of the US fiscal position. "A US public debt crisis is the main threat to [the bond market]," Dr Oliver said. But however the share market performs over the next 12 months, it is likely to be a bumpy ride, he said. "Share market volatility is likely to remain high in the next few months given tariff uncertainties, concerns about US debt and likely weaker growth and profits. "But with Trump likely to pivot towards more market-friendly policies and central banks, including the Federal Reserve and the RBA, likely to cut interest rates further, shares are likely to provide reasonable gains into year end." Another wild card relates to the boss of the US Federal Reserve, Jerome Powell. Donald Trump wants him removed as chair, to be replaced by someone more willing to cut interest rates. "A highly unusual move given that the Fed Chair's term does not expire until May 2026," IG market analyst Tony Sycamore wrote in a note. This has contributed to a fall in the US currency to multi-year lows, as measured by the US dollar index. "Trump's choice to replace Powell when it comes, is expected to align with his agenda of lowering interest rates," Mr Sycamore said. A loss of confidence in any global central bank, with share markets at record highs, is a rather scary thought and a recipe for further volatility heading into the new financial year.
ABC News
10-06-2025
- Business
- ABC News
Two biggest economies meet to negotiate
Samantha Donovan: The world's two biggest economies, the US and China, are again holding talks in an attempt to end the bitter trade war that threatens to derail the global economy. The American president, Donald Trump, launched heavy tariffs on Chinese imports after returning to the White House earlier this year. And China, of course, responded with its own tariffs on US imports. Our business correspondent David Taylor has this report on how the talks are going. David Taylor: Officials from China and the US have been sitting at the same table, figuring out how to co-exist in a highly competitive global economy. FNArena financial commentator Danielle Ecuyer. Danielle Ecuyer: Well, that's really interesting because we have some rather big trade talks going on at the moment in London. David Taylor: Talks at Lancaster House, a UK government mansion, were held yesterday and are set to resume Tuesday morning local time. After agreeing a 90-day pause on the heaviest of their tariffs, Washington and Beijing are trying to strike a deal for beyond that time. Danielle Ecuyer: Both of those countries have a lot to lose from these tariffs, whether it's America losing access to the rare earths, which they need for the defence industry, for the tech industry, or whether it's China, which is really encountering a huge collapse in their exports, and also the fact that they're experiencing quite heavy deflation, which is also a negative. So I think it's probably mutually beneficial that these trade talks come to at least some form of resolution around some of these major issues. David Taylor: Since the talks in Geneva, the US has accused China of moving too slowly on its commitments, particularly around rare earth shipments. Rare earths have become indispensable in the manufacture of high-tech products, including smartphones, wind turbines, electric vehicles, flat screens, lasers, as well as missiles, fighter planes and satellites. Justin Wolfers: A critically important issue for the United States is access particularly to rare earth minerals. David Taylor: University of Michigan professor Justin Wolfers is watching the talks carefully. Justin Wolfers: Trump says the Chinese have slow-walked that access. I don't have dirt under my fingernail, so I couldn't tell you one way or the other. It seems utterly plausible in the context of the history of that relationship that they would have done that. The point is, outside of the four corners of the agreement, each feels aggrieved with the other when they just had a meeting to sort out their differences. David Taylor: Just on that, though, the US Commerce Secretary Howard Lutnick described the talks between China and the United States in Britain early Australian time today as, quote, "fruitful". What do we take from that? Does that matter? Does that mean anything? Justin Wolfers: Here's how you figure this out. If nothing happened, he would have said they were fruitful, and if a lot happened, he would have said they were fruitful. So therefore, the fact that he said they were fruitful tells you nothing. David Taylor: US President Donald Trump put out a positive spin on the talks, saying that they were going well, and he was, quote, only getting good reports from his team in London. We're doing well with China. China's not easy, Trump said, offering no details on the substance of the discussions. But as Justin Wolfers points out, so far there's been little to no progress at all in terms of trade negotiations between the US and its major trading partners around the world, since he unleashed heavy tariffs on so-called Liberation Day. Justin Wolfers: I mean, they're at zero right now. One, if you're a very, very generous grader and include a non-binding agreement with the Brits that the Americans may have already breached. So they're still saying we're here to make deals. It looks very likely that the 90th day will come, and they'll have between fewer than a dozen deals and quite likely zero. David Taylor: The Australian dollar continues to hold its own amid the trade dramas, currently trading around 65 US cents. Samantha Donovan: David Taylor reporting.
ABC News
08-05-2025
- Business
- ABC News
Macquarie Bank's dodgy trading may be tip of 'iceberg' for industry motivated by ‘greed'
Several sources have told the ABC that financial market participants regularly circumvent the law to improve the "bottom line", motivated by "greed". "In the minds of the people doing it, it's probably not consciously 'we're going out to break the system' or be bad but financial people are, by their nature, innovative," professional investor and writer Danielle Ecuyer said. "The motivation of greed — that's humanity, that's the way it works. "If there's a more simple way to get to an optimal bottom line then they will probably pursue it. "You see it in financial products that constantly come to the market and the industry will always look for an easier way, a better way to do something that avoids the rules." Australia's finance industry is riddled with dodgy transactions, according to sources who have spoken with the ABC. ( ABC: Sharon Gordon ) Ms Ecuyer said the continual evolution of the industry posed a problem for regulators. "I think it's a case of regulators constantly chasing their tails," she said. Macquarie Bank in hot water Australia's biggest investment bank has been caught misreporting hundreds of thousands of financial transactions. "[Investment banks] dream up and trade and structure products for clients who have an interest in over-the-counter options solutions and maybe futures solutions as well," investment analyst Henry Jennings said. Australia's biggest investment bank, Macquarie Bank, has been caught misreporting hundreds of thousands of financial transactions. ( AAP: Dan Himbrechts ) Over the counter, or OTC derivatives, are financial contracts traded directly between two counterparties, and not via an exchange like the ASX or Wall Street. What's their purpose? Some of the big electricity users in this country — such as the big aluminium producers — want to lock in the prices they pay for energy. They can do this via a financial futures contract. Macquarie Bank facilitates these transactions. Photo shows Macquarie Group headquarters, Sydney Investment bank Macquarie is hit with additional licence conditions as the corporate regulator slams "multiple and significant compliance failures". Mr Jennings used to run Macquarie Bank's derivatives trading desk in the late 1990s. "Macquarie Bank would then structure a product for, say, for example, Alcoa, that would enable them to ensure they get electricity at the price they've agreed, and they would on-sell that contract perhaps, or even take the position themselves, which would given them exposure to any upside on that pricing structure," he said. To put it at a retail level, it would be like a households calling Macquarie and saying: "We'd prefer to have electricity at $10 a quarter," and they call Macquarie and enter a contract with the electricity wholesaler and lock that price in for you. "So, what would happen then is that if the future price of electricity was $8 instead of $10 then obviously you're paying a little bit over," Mr Jennings said. "If the price went to $20 you'd still be locked in at $10, and anyone who bought that contract from you at [the] $10 level would then benefit from the upside in that electricity price rise." In September 2024, ASIC slapped Macquarie Bank with a record $4.995 million fine for failing to prevent suspicious orders being placed on the electricity futures market. ASIC commissioner Simone Constant suggested on Wednesday that little has changed after that intervention, saying today: "We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel." "Our intervention underscores our concern with the recurrent nature of Macquarie's failures, which were caused by ineffective supervision and weak compliance and control management," Ms Constant said. ANZ pulled over by corporate cop Macquarie Bank is not the only bank in hot water. The ANZ Bank has been rocked by allegations that its traders manipulated the bond rate during a $14 billion bond raising for the federal government's debt agency. It's alleged the ANZ Bank sought to raise bond yields by trading in what is called the "futures market", which is essentially a market that allows traders to bet on future interest rate moves. The ANZ Bank has also been rocked by allegations of traders manipulating bond rates during a $14 billion raising for the federal government. ( ABC News: Keana Naughton ) "Those bets also influence the reference rate that is used to set the price of new bonds," University of New South Wales banking and finance researcher Associate Professor Mark Humphery-Jenner said. A reference rate is an interest rate benchmark used to set other interest rates. "The government looks to the futures rate to assess what return the market requires on its debt and to set the coupon [interest] rate on the bonds it issues," Dr Humphery-Jenner said. "If that futures rate climbs, then so too does the coupon rate on the government's new bond issues. "This increases the government's total interest bill. " ANZ is alleged to have manipulated futures yields higher, enabling it to buy bonds from investors at a low price, " Bond prices move inversely to their interest rate. Banking royal commission's dark shadow The Royal Commission into Misconduct into the Banking, Superannuation and Financial Services Industry, was established in 2017. Led by Commissioner Kenneth Hayne, it investigated misconduct within the banking, superannuation, and financial services sectors. There were concerns, however, that too few recommendations from the inquiry were implemented. The Albanese government legislated the Financial Accountability Regime (FAR) in September 2023. This completed the final major recommendation to government made by the banking royal commission. The FAR replaced the Banking Executive Accountability Regime by imposing tough new accountability obligations on banks, insurers, and superannuation funds. The FAR ensures that these institutions clearly identify individuals who will be held accountable for the actions of the organisation. Risk of widespread suspicious trading in finance industry Dr Humphery-Jenner is concerned "suspicious transactions" in the finance industry remain widespread. "There's certainly the risk of it," he said. "How large that is — potentially there could be more illicit or illegal transactions underneath that iceberg. "For stocks there are often automated programs that will look for suspicious or very odd transactions — particularly around market announcements — however, in this particular case, we're looking at over-the-counter derivatives where there's a lot less of that type of automated screening. " So, absolutely there's a risk of [widespread dodgy financial transactions] which is why ASIC really wants to get that compliance in order. " Macquarie Bank released a statement responding to ASIC's action. "Macquarie Bank takes its role as a licensed entity extremely seriously, including the importance of ensuring the integrity of the markets in which it operates and learning from instances where compliance has been inadequate," the bank said.
