Latest news with #economic growth
News.com.au
2 hours ago
- Business
- News.com.au
Major banks and miners jump in broad market rally
Australia's sharemarket jumped in line with the Asian markets, after US President Donald Trump announced a 'massive deal' with Japan. The benchmark ASX 200 gained 60 points or 0.69 per cent to finish trading on Wednesday at 8,737.20, while the broader All Ordinaries climbed 59.90 points or 0.67 per cent to close at 9,001.49. Australia's dollar rose 0.13 per cent and at the time of writing was buying 65.62 US cents. In an agreement between the US and Japan, the US will impose a 15 per cent levy on Japanese imports, down from 25 per cent. Japan in return will invest $US550bn into the United States. Stocks on Japan's Nikkei index rallied and the yen leapt on the news the country was able to sort a trade deal with Mr Trump, including on the critical car manufacturing sector. Last year, cars shipped to the US were around 28 per cent of Japan's 21.3 trillion yen of total exports to the world's largest economy. Global X senior investment strategist Billy Leung said Japanese equities hit a record high on Wednesday on the back of the announcement. 'This isn't just about a one-day rally. Japan is the world's largest robot manufacturing country and its role in global tech supply chains especially in high-precision manufacturing and automation makes it a key beneficiary of both tariff clarity and the broader reconfiguration of US-aligned production,' he said Australia's sharemarket followed with 10 of the 11 sectors gaining, led by the miners, banks and energy sector. The big three iron ore miners all finished in the green, with BHP up 0.9 per cent to $41.85, Rio Tinto gaining 1 per cent to $119.47 and Fortescue gaining 2.3 per cent to $18.21. Woodside Energy shares were up 1.45 per cent to $25.21, Yancoal Australia jumped 2.81 per cent to $6.58 and Whitehaven Coal soared 6.53 per cent to $7.18. On an overall strong day for the financial sector, three of the four major banks gained during Wednesday's trading. Commonwealth Bank shares finished 0.51 per cent higher trading at $173.30, Westpac shares gained 1.41 per cent to $33.11 and ANZ soared 2.52 per cent to $30.57. NAB slipped 0.05 per cent to $37.20. In company news, shares in Telix Pharmaceuticals plunged 15.13 per cent to $21.32 after it told the market it had received a subpoena from the US Securities and Exchange Commission for various documents primarily related to the company's disclosure regarding its prostate cancer therapy. Shares in Australia's top fuel retailer Ampol Limited rallied 3.27 per cent to $27.77 despite telling the market it forecasts weaker half yearly earnings on the back of sea-freight conditions impacting its supply chains. Iluka Resources jumped 4.05 per cent to $5.39 after the global critical minerals business after telling the market it achieved its full-year production guidance for Zircon by June 30.
Mail & Guardian
5 hours ago
- Business
- Mail & Guardian
South Africa must unlock financial sector for growth, says African Development Bank
The African Development Bank (AfDB) says South Africa's well-developed financial sector has the potential to be the continent's powerhouse. The African Development Bank (AfDB) says South Africa's well-developed financial sector has the potential to be the continent's powerhouse if structural constraints are addressed. 'South Africa has a well-developed and large financial sector with an asset-to-GDP ratio of 88%, well above that of most emerging markets. The financial system consists of banking institutions, pension funds and a dynamic stock exchange,' the bank said Accounting for 20% of GDP, the country's financial sector provides broad access to financial services. More than 90% of the adult population uses formal financial services, with 81% holding bank accounts and 78% using non-bank financial institutions. 'The country needs a concerted focus on enhancing domestic capital mobilisation, more efficient public expenditure, and a stronger overall business environment to unlock greater investment and foster sustainable growth,' the AfDB said. It urged the government to follow through with plans to enhance business growth by reducing red tape, fostering a supportive environment for small and medium enterprises, improving infrastructure, strengthening multilateral cooperation, clamping down on crime and promoting skills development. 'While the financial system is stable, non-performing loans rose from 4.7% of total loans in 2023 to 5.7% in 2024 due to weak business growth. Household financial distress from rising interest rates since late 2021 has led to mortgage defaults, but easing borrowing costs are expected to support the sector,' it said. The development bank forecasts that South Africa's real GDP growth will remain subdued at 0.8% in 2025, with a likely uptick to 1.2% in 2026, depending on 'improved energy supply, freight rail and port management'. It identifies some of the continued domestic risks as 'ongoing infrastructure deficits, unresolved problems in electricity provision, 'South Africa is one of Africa's most dynamic economies, underpinned by a diversified economic base, strategic geographic location and ongoing commitment to structural transformation,' the report said, noting however that economic growth has underperformed in the past three years to 2024, averaging 1.1%. Factors such as China's economic slowdown, geopolitical tensions, climate vulnerabilities and trade disruptions are projected to further add uncertainty to the country's growth outlook. The AfDB highlights strengthening institutions as essential to improving tax administration, corporate governance and capacity-building to make full use of natural, human, financial and private sector capital. Although the country has many advantages because of its location, targeted training, regional staff exchanges and international collaboration are vital to improving performance and resilience. 'GDP growth The bank said South Africa's income inequality remains among the highest globally, with a Gini coefficient of 0.67 recorded in 2018. 'Government spending remains highly redistributive, with up to 61% of the budget allocated to the social wage — spending on health, education, social protection, community development and employment programmes,' the report said. South Africa funds about 'To meet its Vision 2030 targets and the sustainable development goals, South Africa requires about $254 billion to $329 billion in financing for transport, water and sanitation and education between 2022 and 2030,' the report said. Inefficiencies in public spending and underuse of business and natural resources limit the country's financial capacity. 'Unlocking South Africa's natural capital requires good governance, stronger institutional coordination, adherence to the rule of law, infrastructure development, and capacity development,' the AfDB said.
Bloomberg
13 hours ago
- Business
- Bloomberg
Paraguay Holds Key Rate at 6% After Lifting CPI, Growth Outlook
Paraguay's central bank held its benchmark interest rate unchanged at 6% a week after it raised its outlook for inflation and economic growth. The central bank has kept borrowing costs steady for 16 consecutive months. Analysts surveyed by the central bank see no change in borrowing costs through the end of the year followed by a quarter of a point cut in 2026.
The Guardian
a day ago
- Business
- The Guardian
BoE governor warns Reeves over weakening banking rules too much
The governor of the Bank of England has warned the chancellor, Rachel Reeves, against a radical watering-down of City banking rules because it would risk repeating the mistakes that led to the 2008 financial crisis. Andrew Bailey said that while some changes to the rules could be helpful, wholesale changes to unleash risk-taking in the City of London in the name of economic growth would be counterproductive. 'There isn't a trade-off between financial stability and growth. We've had that experience,' he told MPs on the Treasury select committee. Reeves last week used her annual Mansion House dinner to announce sweeping changes to banking industry rules, telling City bosses she believed that in too many cases regulation was a 'boot on the neck' of business. Bailey refused to back the chancellor's analogy when pressed by the Treasury committee chair, Meg Hillier, saying: 'I do not use those terms, let me say that … It is not a term I use.' The governor said veterans of the 2008 financial crisis recognised there were clear dangers linked to slashing City red tape. 'Sadly I can understand when I hear people say the financial crisis is now way in the past, we've got past that, that's all solved, that's out of the way, move on … Yes of course the world moves on,' Bailey said. 'But that was the experience of losing financial stability and we had a very serious recession in this country after that.' However, he said regulations should not be set in stone, highlighting how the government could tweak City rules after Brexit to make Britain's banking industry regulations more reflective of the UK than the EU. 'There are areas where we should clearly look at it. And we'll look at it, we're very open to that. We've announced a whole range of things we're doing. That's a good thing. But we can't compromise on basic financial stability, that would be my overall message.' Bailey's comments come after several leading figures involved in Britain's post-2008 drive to prevent a repeat of the financial crisis warned Labour against unpicking bank ringfencing – a key measure to separate high street banking from riskier investment banking that was introduced after the collapse. Sir John Vickers, the architect of the UK's ringfencing rules, told the Guardian a wholesale retreat would be a 'very bad idea'. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Against a backdrop of intensive lobbying from leading banks to water down the regulation, Bailey said such a change would have little benefit for lenders and put UK households at heightened risk. 'It [ringfencing] has benefits in terms of UK customers and UK consumers; businesses and households. I think that is a helpful feature of it. I don't think it hinders banks fundamentally in terms of their business models,' Bailey added. 'Again, at the margins, I am sure there are things that can be improved and we will work constructively to go through that process. It has established itself as part of the system and to me it would not be sensible to take it away at this point.'
ABC News
a day ago
- Business
- ABC News
RBA meeting minutes reveal plan for 'cautious and gradual' rate cuts clashed with unemployment 'surge'
They say hindsight is 20-20, but three members of the Reserve Bank board are likely to turn up at the next meeting with the strong temptation to say, "we told you so". The RBA has released the minutes from its meeting two weeks ago, when interest rates were left on hold, catching the market and most private-sector economists off guard. That decision to keep rates steady was made by a six to three majority, with the minority arguing there was no need to wait. "The case to lower the cash rate target at this meeting rested on a view that there was already sufficient evidence to be confident that inflation was on track to be sustainably back at the midpoint of the target range, if not lower," the minutes revealed. The minority in favour of a cut argued that US tariff policy would be a drag on future global economic growth, that Australia's economic expansion remained "subdued", households were saving more, wages growth and services inflation were weakening, and that "recent data suggested a loss of momentum in activity". "Moreover, there was uncertainty around whether market sector employment growth would increase by enough to offset an expected slowing in non-market sector employment growth to maintain momentum in overall employment growth," the minutes showed. That last concern appears to have since been vindicated by another weak set of jobs numbers, released last week, showing unemployment had jumped from 4.1 per cent in May to 4.3 per cent in June, seasonally adjusted, although some analysts have attributed the scale of that increase to statistical variation. At her post-meeting press conference, RBA governor Michele Bullock said the disagreement among the board was not one of where rates should head, but merely the timing of further rate cuts. This is reflected in the formal minutes from the meeting. "All members agreed that, based on the information currently available, the outlook was for underlying inflation to decline further in year-ended terms, warranting some additional reduction in interest rates over time," the minutes noted. The majority who decided to keep interest rates on hold based their decision on a few key elements. Unlike the minority, most board members interpreted recent economic data as surprisingly upbeat, including the very monthly inflation figures that had prompted some market economists to bring forward their rate cut forecasts from August to July. "Monthly indicators of inflation had been marginally higher than were consistent with the staff's forecast for underlying inflation in the June quarter, growth in private demand in the March quarter had been a little stronger than expected and conditions in the labour market had so far not eased as anticipated," the majority argued. They also said that global economic outcomes had so far been more benign than feared at the previous May meeting, when rates had been cut, reducing the urgency for another rate cut. "Members noted that the baseline forecasts already incorporated some deterioration in global economic conditions because of higher tariffs and policy uncertainty, which was consistent with the evidence currently available on how the trade tensions and other factors might be resolved," the minutes revealed. "Moreover, the forecasts had been conditioned on a relatively modest and gradual path of further easing of monetary policy over the period ahead." After two rate cuts, the majority of the board was also concerned that it would be difficult for the RBA to know exactly when monetary policy had changed from being restrictive — that is, holding back economic growth — to neutral or boosting activity. Given the degree of uncertainty around what the current "neutral" level of the cash rate is, the majority argued that "lowering the cash rate a third time within the space of four meetings would be unlikely to be consistent with the strategy of easing monetary policy in a cautious and gradual manner". Despite the expressed caution of the majority on the RBA board, Abhijit Surya from Capital Economics expects rates to fall at next month's meeting on August 11-12, with further cuts to follow. "With the unemployment rate having surged in June and timely indicators suggesting that activity and inflation both remain subdued, the bank will almost certainly resume its easing cycle in August," he noted. "Looking further ahead, we expect the board to cut rates to 2.85 per cent by mid-2026, in line with the bank's stated goal of ensuring that monetary policy is no longer restrictive. "Our terminal rate forecast is below the 3.1 per cent currently predicted by the analyst consensus." Either way, that implies between three and four more rate cuts from the current cash rate of 3.85 per cent, unless the market has again misread the degree of caution among the majority of RBA board members.
