Australian shares have jumped by more than 1 per cent, driven by stronger banks and miners, as investors have bet that tonight's US consumer inflation figures will show that steep interest rate rises in North America have curbed prices and will prompt the Federal Reserve to limit further rate hikes.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Markets snapshot at 4:25 pm AEDT
By Sue Lannin
ASX 200: 7,280 up 1.2 per cent
All Ordinaries: 7,490 up 1.1 per cent
Australian dollar: 69.21 US cents up 0.3 per cent
Nikkei 225: 26,452 steady
Hang Seng: 21,407 down 0.1 per cent
Shanghai Composite: 3,160 down 0.1 per cent
Dow Jones: 33,973 up 0.8 per cent
S&P 500: 3,970 up 1.3 per cent
Nasdaq Composite: 10,932 up 1.8 per cent
FTSE 100: 7,725 up 0.4 per cent
Spot gold: $US1884.59 an ounce up 0.4 per cent
Brent crude: $US82.83 a barrel up 3.4 per cent
Iron ore: $US121.60 up 1.3 per cent
Bitcoin: $US18,174 up 3.6 per cent
Bonza given green light by CASA for regional flights
By Sue Lannin
Low cost airline Bonza has won approval to start flying across regional Australia.
Bonza will begin flights to regional airports across Queensland and interstate following approval by the industry regulator.
More from the ABC's Owen Jacques on the Sunshine Coast.
ASX 200 movers and shakers
By Sue Lannin
Here are the top movers on the ASX 200 index.
All sectors were higher with banks and miners leading the way.
Lithium firm Pilbara Minerals (+4.5 per cent) did the best, while coal miner New Hope (-3.6 per cent) was the worst performer.
ASX rallies on hopes of a slowdown in US rate rises
By Sue Lannin
The Australian share market rallied today to the highest in five week as investors hope that tonight's US inflation figures will show that price rises are moderating in North America.
A fall in consumer prices could prompt the US Federal Reserve to scale back its interest rate rises in 2023.
The ASX 200 index rose 1.2 per cent to 7,280, while the All Ordinaries index put on 1.1 per cent to 7,490.
All sectors rose on the market led by banks and miners.
Fashion retailer City Chic Collective rose 17 per cent.
Gold Road Resources (3 per cent) fell after seeing a drop in quarterly gold production, and financial services company MA Financial fell by more than 10 per cent after slashing its profit forecast.
BHP put on nearly 2 per cent to a new record high as iron ore prices rose thanks to China's reopening, while all the big banks made strong gains with National Australia Bank (2.5 per cent) doing the best.
It's been a good start to the year with the benchmark index up just over 3 per cent in less than two weeks.
And the ASX 200 has clawed back last year's 5.5 per cent annual loss, now down 2.1 per cent over the last 52 weeks.
Discount airfares come back down to earth
By Sue Lannin
After months of sky high airfares after the full reopening of Australia's borders last year, prices are starting to come down according to the Federal Government's Bureau of Infrastructure and Transport Research Economics (BITRE).
BITRE says the best discount airfare index fell from 112 points in December to 74.5, but it remains above the 54.1 mark seen in January last year.
And it's still expensive with the Bureau saying the cheapest return flight from Sydney to Perth is a cool $898, and $878 to fly from Perth to the iron ore port of Port Hedland in northern Western Australia.
You can fly to Bali for less than that.
Shipping costs fall by 80 per cent in 2022
By Sue Lannin
And while we are talking about trade, in 2022 there was a dramatic fall in the cost of shipping goods around the world as global economies slowed down because of higher interest rates.
Also the pent up demand from COVID-19 lockdowns and restrictions started to fade.
The Drewry World Container Index, a key indicator for the cost of shipping containers used to transport goods, has fallen 77 per cent from December 2021, with the cost of hiring one 40 foot shipping container down from $US9,304 to $US2,135.
Shipping costs reached a record high in September 2021 with the composite price for a 40-foot container reaching $US10,377.
And the cost of shipping a container from Shanghai, the world's biggest sea port, has also fallen significantly with prices from Shanghai to the Dutch port of Rotterdam topping $US14,000 per container during 2021.
While the cost to hire a shipping container has fallen dramatically, Drewry notes that prices remain 50 per cent higher than average 2019 (pre-pandemic) levels, when you could hire a shipping container for a mere $US1,420.
If you are interested in reading more about the impact of sky high shipping costs on Australian businesses then look at this story I wrote back in 2021.
'Bumper year for Australian exporters'
By Sue Lannin
Commonwealth Bank associate economist Harry Ottley says the rise in the trade surplus to $13.2 billion in November was a strong result.
Lower prices for oil and gas saw exports fall, but imports fell at a larger pace because of a decline in the cost of freight transport, which Mr Ottley thinks is probably due to the fall in global shipping costs.
Service imports increased with robust demand for international travel and higher jet fuel prices driving that increase.
And despite China's import restrictions on a range of Australian products, including coal, the Middle Kingdom remains our biggest trading partner, followed by Japan and South Korea.
"It was a bumper year for Australian exporters," Mr Ottley said.
"Extremely high commodity prices caused by the conflict in Ukraine have played a significant role."
"Imports have also been very strong owing to elevated global inflation and the buoyant domestic consumer."
"Looking forward to early 2023, we expect the trade surplus to remain healthy as elevated commodity prices and strong demand for Australian goods persist."
Asian stocks weaker ahead of US consumer inflation numbers
By Sue Lannin
While the Australian share market is rallying by more than 1 per cent today, Japanese investors are more cautious with the benchmark Nikkei 225 index flat.
Elsewhere, the Hang Seng in Hong Kong is 0.8 per cent lower, and the Shanghai Composite is down 0.2 per cent.
The Australian dollar is higher at around 69.1 US cents.
Investors are hoping a weaker inflation read in the US will see the US Federal Reserve scale back some of its rate rise plans.
Food prices drive inflation in China
By Sue Lannin
China's National Bureau of Statistics says consumer inflation rose in December thanks to higher food prices.
The consumer price index was 1.8 per cent higher compared to a year earlier.
It rose faster than the 1.6 per cent increase seen in November.
Consumer inflation rose 2 per cent over 2022, less than the 3 per cent target set by the Chinese government.
However, producer prices, prices at the factory gate, fell for the third month in a row.
Reuters
Spending at five year low for first week of 2023
By Sue Lannin
Despite higher borrowing costs and gloom about the future, Australians have been spending like there is no tomorrow.
The Australian Retailers Association says shoppers spent more than $70 billion in pre-Christmas trading, however price increases have bolstered that figure.
And people spent up big on the online sales events like the Black Friday sales which boosted retail trade to a record $36 billion over November, a number which is also driven by inflation.
So it's no surprise consumers have taken a breather in the first week of January.
ANZ says spending for the first week of the year was down 4 per cent compared to the first week of 2022.
ANZ economist Adelaide Timbrell says those numbers suggest that higher interest rates are starting to bite.
Of most concern for the economy is that households spent less during key end of year trading dates in 2022, compared to during the pandemic in 2020 and 2021.
"Weak ANZ observed spending during the end of 2022 and the first week of 2023 suggests that cash rate hikes and inflationary pressures are having an impact on household spending appetite," she said.
"We expect consumption growth to slow in 2023, which will put downward pressure on economic growth."
Bear market buying opportunities?
By Sue Lannin
Recessions are damaging to countries and people alike as economies come to a standstill, workers lose their jobs, and buying necessities becomes a struggle.
The World Bank says the global economy is on the brink of recession amid the steep rate rises by central banks, the rising cost of living, the war in Ukraine, and COVID-19.
The US is also facing a recession because of the Fed's rapid fire rate hikes.
Both the S&P 500 and the tech heavy Nasdaq have been in a bear market, a market which is down by one fifth or more from its peak, and which could fall further.
But investment strategist Jeffrey Schulze from global equity manager Clearbridge Investments says bad times can be a buying opportunity.
"Markets may retest or even break through the October lows in 2023, but we believe long term investors can benefit from deploying capital methodically and opportunistically in equities," he said.
"Over the last 80 years, equities have fallen an additional -15.6 per cent on average after breaching the -20 per cent bear market threshold."
"However, long-term investors may want to take advantage of selloffs of such magnitude, with the additional losses once in bear market territory typically quickly recovered."
Mr Schulze says Clearbridge thinks a recession is likely in North America in 2023 depending on how far the Fed goes with its rate rises.
“Although fewer excesses favour a shallower recession, a restrained central bank risks a deeper recession once one emerges."
"While longer-term investors have typically been well-compensated for adding risk at this point in past bear markets, we see a choppy first half of the year as the market tries to assess the ultimate direction for the economy and earnings while incoming data fails to reveal a clear trend."
“Consequently, we continue to favour higher quality and more defensive areas.”
Trade surplus climbs to a five month high
By Sue Lannin
Australia's trade surplus widened by $458 million from October to November to $13.2 billion according to the Bureau of Statistics, as a fall in imports offset a fall in exports.
Imports, led by freight transport, fell by 1.5 per cent, while exports dropped by 0.4 per cent because lower liquefied natural gas shipments and prices.
The figures were way better than expected by ANZ economists who tipped the number to be $11.5 billion for the month.
There was a decline in the amount of iron ore shipped to South Korea and China, but that was offset by more of the steel making ingredient going to Japan.
ASX 200 movers and shakers
By Sue Lannin
Here's the best and worst performers on the ASX 200 index today.
Australian market rallies on hopes of weaker US inflation
By Sue Lannin
The Australian share market is having a bumper day after a rally on Wall Street ahead of the latest US consumer inflation figures.
Economists surveyed by Reuters are expecting a pullback in inflation, which could see the US central bank continue to ease back on rate rises.
Both the ASX 200 index and the All Ordinaries index have added 1 per cent to their value today with nearly all sectors higher.
Higher iron ore prices are bolstering big miners like BHP (+1.6 per cent) and big banks are also making strides with National Australia Bank (+1.4 per cent) doing the best.
Higher oil prices are pushing up energy stocks like Karoon Energy (+2.6 per cent), Woodside Energy (+1.8 ), and Santos (+1.2 per cent).
Australian market opens higher
By Sue Lannin
Australian shares have lifted in early trade after a good night on Wall Street.
The ASX 200 index put on 0.8 per cent in the first ten minutes of trade with all sectors in the green.
Big banks are higher, while big miners have been boosted again by higher iron ore prices.
BHP and Fortescue Metals are both up more than 1 per cent.
Real estate firms, healthcare, industrials, and consumer staples are doing the best.
Investment manager Pendal (+0.5 per cent) says the Supreme Court has approved its takeover by financial firm Perpetual.
Its shares will be suspended by the close of trade today.
Gold miner Gold Road Resources (2.7 per cent) says its Gruyere mine in Western Australia saw a drop in production from the September to December quarters.
Copper miner Sandfire Resources (+3.6 per cent) is the best performer, while Whitehaven Coal (-5.7 per cent) is the worst performer on the ASX 200.
World Economic Forum says cost of living dominates global risks
By Sue Lannin
A survey of 1200 global risk experts, policymakers and business leaders by the Davos based World Economic Forum has ranked the rising cost of living as the most severe global risk over the next two years.
Biodiversity loss and ecosystem collapse is seen as the biggest risk over the next decade.
In a new report, the WEF says the world is facing both old and new problems including inflation, cost of living crises, widespread social unrest, geopolitical confrontation, low growth, and worsening climate change.
"As we stand on the edge of a low-growth and low-cooperation era, tougher trade offs risk eroding climate action, human development and human resilience," the report said.
The annual gathering of world leaders begins next week in Davos, Switzerland.
Yesterday the World Bank said the globe is teetering on the verge of recession, and the International Monetary Fund expects one third of the world to see a recession this year.
Here's what the World Economic Forum says are the biggest risks facing the globe.
US stocks end higher on inflation hopes
By Sue Lannin
Hopes that steep interest rate rises are cooling runaway inflation have seen US stocks rise.
The latest US consumer inflation figures are out tonight and economists surveyed by Reuters are expecting prices to have increased by 6.5 per cent in December from a year ago.
That would be a slowdown from the 7.1 per cent annual rate seen in November.
The Federal Reserve is expected to press on with its rate rises with traders seeing a 75 per cent chance of a one quarter of a percentage point hike next month, with rates peaking near five per cent by June.
The Dow Jones index put on 0.8 per cent, the S&P 500 rose 1.3 per cent and the tech heavy Nasdaq jumped 1.8 per cent.
It was the fourth day of gains for the Nasdaq.
Tech stocks drove the gains with Google owner Alphabet (+3.1 per cent), tech giant Amazon (+5.8 per cent), and electric car maker Tesla (+3.7 per cent) all higher.
Goldman Sachs shares rose nearly 2 per cent as it begins laying off more than 3000 employees.
Struggling home wares retailer Bed Bath & Table, which is considering bankruptcy protection, jumped by 70 per cent as investors speculating it could be a takeover target.
FTX administrators find $7 billion in sellable assets
By Sue Lannin
Bloomberg reports that advisers to the collapsed crypto currency exchange, FTX, have discovered more than $7 billion in cash and crypto assets that could be sold to repay creditors.
The crypto firm went into bankruptcy protection in November with billions of dollars in debt.
FTX lawyer Andrew G. Dietderich told a US court that the company is looking at selling assets worth $US4.6 billion ($6.7 billion).
Advisers have also found a large amount of other crypto assets that are harder to sell.
They've found more than 9 million customer accounts, but it's unclear at the moment whether they will get any money back.
Founder Sam Bankman-Fried has been charged with fraud, money laundering and conspiracy and was released by a US court on $US250 million ($362 billion) bail to live with his parents while he fights the criminal charges.
For background, have a read of this excellent article by my colleagues Rebecca Armitage and North America correspondent Barbara Miller.
BlackRock lays off 500 staff
By Sue Lannin
Global investment company BlackRock is the latest financial giant to lay off staff as the world's economy slows down.
Reuters reports that BlackRock is cutting up to 500 jobs as Wall Street downsizes in the face of high interest rates that have raised the risk of a recession.
The world's largest investment manager has nearly 20,000 employees.
Last month, BlackRock's chief financial officer said the company was freezing most hiring and reducing expenses.
The firm is expected to see a 22 per cent drop in fourth quarter profit when it reports its results tomorrow.
In October, the investment manager said assets under management dropped by nearly one fifth from last year.
BlackRock shares fell 1.1 per cent to $US748.73.
Meantime, Wall Street titan Goldman Sachs has starting firing more than 3000 employees.
US stocks rise ahead of inflation numbers
By Sue Lannin
Good morning, I'm Sue Lannin here with all your markets and finance news.
US stocks are gaining ahead of tonight's crucial US consumer inflation numbers.
Investors are hoping that the Federal Reserve's steep interest rates have curbed inflation.
Reuters say the figures are expected to show that consumer prices in North America rose by 6.5 per cent in December from a year ago.
That would be a slowdown in the 7.1 per cent rise over the year to November.
The Dow Jones index is up 0.6 per cent, while the S&P 500 has gained 1 per cent in afternoon trade.
The Australian dollar is up one third of a per cent to 69.11 US cents, and the Australian sharemarket is expected to follow Wall Street higher.
