ASX Live News | ASX Set For Weak Rise This Morning, RBA Decision Day

According to the current money markets, there is a 60% probability of a cash rate increase during the August meeting.

Additionally, there is a 90% chance priced in that the Reserve Bank will raise the rate to 4.35% by September.

Traders have also adjusted their predictions for the peak interest rate, lowering it from 4.57% in February to 4.47%. Previously, the market had accounted for two more interest rate hikes before this point, but now only expects one and a half.

There’s still no guarantee that the proposed fight between Elon Musk and Mark Zuckerberg may take place — however, a new battle has just begun.

Meta has just announced the upcoming launch of Threads, a Twitter rival that is set to hit US Apple app stores by Thursday. The app is said to be linked to Instagram, another Meta product and has its sights firmly on Twitter’s market.

Meta poised to launch rival to Twitter https://t.co/vp6o4Nouje

— Financial Times (@FinancialTimes) July 4, 2023

ASX closed up 0.4%, with the bulk of the gains seen in the Financials, Energy, and Real Estate sectors. Minor losses were seen within IT Tech, Telecom and Health Care sectors.

The best individual performers:

• GQG Partners [ASX:GQG], up 7.47%
• Lynas Rare Earths Group[ASX:LYC], up 4.12%
• Paladin Energy [ASX:PDN], up 4.05%
• Sayona Mining[ASX:SYA], up 4.05%
• Eagers Automotive [ASX:APE], up 3.83%

The worst performers:

• Mercury NZ [ASX:MCY], down 4.63%
• Domain Holdings Aust [ASX:DHG], down 3.26%
• The Star Entertainment Group [ASX:SGR], down 2.12%
• Ventia Services Group[ASX:VNT], down 1.79%
• Downer Edi [ASX:DOW], down 1.54%

ASX 200 closed up 0.40% today as investors were buoyed by news of a pause in interest rate hikes by the RBA.

The RBA ‘s call today was a contentious one, with protestors gathered outside the Reserve Bank as the board met to deliberate today’s decision.

Market Update

All figures shown are from 4:00pm AEST

• $AUD down -0.27% at 66.52 US cents
• ASX futures up +0.37% to 7,242.5
• S&P 500 up +0.12%
• NASDAQ up +0.21%
• DOW up +0.032%
• FTSE down -0.057%
• STOXX down -0.39%
• SSE down -0.22%
• Bitcoin up +1.08% to $US 31,006.16
• Spot gold up +0.10% to $US 1,923.75
• Iron ore down -1.51% to $US 110.87
• Brent Crude up +0.58% to $US 75.08pb

Protestors unhappy with current RBA leadership, out on a drizzly day.

Source: Yahoo News

US stocks on the S&P500 underperformed in the first half of this year.

Can the same be said for Australian stocks?

Are dividends a good metric for finding value in stocks in a bear market?

Read my thoughts, where I outline dividends vs. earnings or check out our latest report to find Australian stocks with healthy growth that are paying dividends.

Companies in the S&P 500 that don't pay a dividend were up 18% in the first half of the year vs. a 4% gain for dividend payers. That's the biggest underperformance in dividend stocks since 2009.https://t.co/EmioqZ8FaL pic.twitter.com/1aUlpOpWBH

— Charlie Bilello (@charliebilello) July 2, 2023

The ASX has jumped around 45 points (0.63%) on the news from the RBA of a target cash rate pause for July.

Investors will now hold out hope that further rates are not required to curb inflation.

Source: ASX

The Reserve Bank of Australia has held the cash rate steady at 4.1%, in line with market expectations. The central bank’s decision comes as inflation in Australia has passed its peak, but remains sticky in some core areas.

In its statement, the RBA said that it expects inflation to return to the 2-3 per cent target range in a reasonable timeframe, but that some further tightening of monetary policy may be required.

The RBA board also said that it is alert to the risk that expectations of ongoing high inflation could contribute to larger increases in both prices and wages.

The RBA’s decision to hold interest rates steady this month will provide some time for the bank to assess the impact of the recent rate hikes and the economic outlook. However, the bank has made it clear that it is committed to returning inflation to target, and that further rate hikes are possible if needed.

What does this mean for borrowers?

The RBA’s decision to hold interest rates steady is a relief for borrowers, who have already seen their monthly repayments increase significantly in recent months. However, it is important to remember that the RBA has flagged that further rate hikes may be needed, so borrowers should be prepared for their repayments to increase further.

What does this mean for businesses?

The RBA’s decision to hold interest rates steady is a positive sign for businesses, as it will help to keep costs down. However, businesses should still be aware of the risk of further rate hikes on demand.

What does this mean for the economy?

The RBA’s decision to hold interest rates steady is a sign that the central bank is playing for time, as previous hikes still flow through the economy.

The RBA warned that the path to achieving a balance between inflation and economic growth is narrow. Highlighting the risk that the RBA could still overtighten monetary policy in the future, and drive Australia into a recession.

Overall, the RBA’s decision to hold interest rates steady is a cautious one. The bank is clearly concerned about the risk of high inflation, but it is also aware of the risks of further rate hikes. The next few months will be critical in determining how the RBA’s monetary policy stance evolves.

Justin Bieber purchased this Bored Ape NFT in January 2022 for $1.31 million.

Today, it's worth $59,090. pic.twitter.com/nKKDzH3UvP

— Watcher.Guru (@WatcherGuru) July 3, 2023

Costa Group, Australia’s largest horticultural company, is set to be acquired by New York private equity firm Paine Schwartz Partners.

The deal, which is expected to be announced as early as this week, would value Costa at around $1.3 billion.

Shares of Costa Group Holdings [ASX:CGC] have jumped 11.82% at the time of writing, with shares at $3.31 per share.

Paine Schwartz has gradually increased its stake in Costa over the past few months. In October, it acquired a 14% stake in the company, and in March, it raised its stake to 14.8%.

The firm has said that it did not have any current intention of making an offer to acquire control of Costa, but it appears that the two sides have now reached an agreement.

Costa is a leading producer of fresh fruits and vegetables in Australia. The company has operations in all states and territories and exports its products to over 50 countries worldwide.

In its most recent financial year, Costa generated revenues of $1.36 billion and a net profit of $30.2 million.

The company reported a decline in its earnings for fiscal 2022, impacted by difficult weather conditions. But based on a trading update provided in May, Costa expects favourable market demand for its citrus in this season.

Paine Schwartz is a global private equity firm with over $7 billion in assets under management. The firm has a long history of investing in the food and agriculture sector and has a track record of successfully growing and transforming businesses.

The acquisition of Costa would be a major coup for Paine Schwartz. The company would gain access to Costa’s leading market position, its strong track record of profitability, and its extensive distribution network. Paine Schwartz could also leverage its expertise in the food and agriculture sector to help Costa grow its business and reach new markets.

The deal would be subject to regulatory approval.

What does this mean for Costa Group?

The acquisition of Costa Group by Paine Schwartz Partners is a significant development for the company. It is likely that Paine Schwartz will invest in Costa’s operations and help it to grow its business. The private equity firm may also look to expand Costa’s geographic reach or enter new product categories.

For Costa shareholders, the acquisition will likely result in a significant premium on the share price. However, it is important to note that any future growth or profitability of the company will depend on the strategic decisions made by Paine Schwartz.

What does this mean for the Australian fresh produce industry?

The acquisition of Costa Group by Paine Schwartz Partners is a major development for the Australian fresh produce industry. It indicates that private equity firms are increasingly interested in investing in the sector. This could lead to more investment in the industry and help boost innovation and growth.

However, it is also important to note that private equity firms often focus on short-term returns. This could mean that they may not be as committed to the long-term sustainability of the Australian fresh produce industry.

Overall, the acquisition of Costa Group by Paine Schwartz Partners is a significant development for the Australian fresh produce industry. It is too early to say what the deal’s long-term impact will be, but it is clear that it is a major moment for the sector.

ASX 200 up 0.05%

Markets are in a holding pattern as we await the news from the RBA

The best individual performers:

• Sayona Mining [ASX:SYA], up 6.76%
• Pilbara Minerals [ASX:PLS], up 6.32%
• Gold Road Resources [ASX:GOR], up 3.90%
• Lynas Rare Earths [ASX:LYC], up 3.11%
• Meridian Energy [ASX:MEZ], up 2.82%

The worst performers:

• Domain Holdings Aust [ASX:DHG], down 2.87%
• Downer Edi [ASX:DOW], down 2.37%
• Resumed Inc [ASX:RMD], down 2.00%
• Mercury NZ [ASX:MCY], down 1.65%
• Pexa Group [ASX:PXA], down 1.63%

Update of performers as of 12:00pm AEST

CoreLogic’s data for June shows house prices are still rising.

This may impact the RBA decision today but we are still waiting for the most recent hikes to move through markets.

June CoreLogic data confirms Aust home prices up again. The underlying demand/supply imbalance (with surging pop) has dominated rising rates over the last few mths – but the risk of another leg down in prices as the collapse in the capacity to pay &rising unemp impacts is high pic.twitter.com/dqnsidSp3v

— Shane Oliver (@ShaneOliverAMP) July 3, 2023

PwC Australia has fired eight partners, including its former CEO, as part of an internal investigation into the leak of confidential government tax plans.

The firm said on Monday that the eight partners had been found to have breached professional standards or failed to prevent the misuse of confidential information.

The leak scandal first came to light in January, when it was revealed that a former PwC partner had shared confidential drafts of the government’s tax plans with colleagues. The information was then used to pitch for work from clients who were affected by the proposed changes.

PwC Australia’s chairman, Ian Silk, said that the firm had taken the allegations “extremely seriously” and had conducted a “thorough and independent investigation”. He said that the eight partners who had been fired had “failed to meet the high standards of professional conduct and ethics that we expect of our people”.

The firings are the latest in a series of measures that PwC Australia has taken to try to contain the fallout from the scandal.

In May, the firm’s former CEO, Tom Seymour, resigned after admitting that he had received emails containing confidential information about the government’s tax plans.

PwC Australia has also sold its public sector advisory business to private equity firm Allegro Funds for $1. The new company will be called Scyne Advisory. Allegro said it will invest $100 million into the phoenixed public sector advisory company.

Any partners who joined the new company have agreed to give up claims to PwC’s retired partner payout plan.

The scandal has damaged PwC Australia’s reputation and raised questions about its culture and governance. The firm has said that it is committed to rebuilding trust with its clients and stakeholders.

‘Our people have deep sector knowledge and they will set our new culture, with the needs of our clients remaining paramount…Restoring those clients’ trust is our No. 1 priority.’

As of yesterday, the markets expect no change from the RBA today, with indicators showing an 84% expectation of a pause and 16% of the market believing a hike is coming.

The indicator calculates a percentage probability of an RBA interest rate change based on the market-determined prices in the ASX 30-Day Interbank Cash Rate Futures.

Source: Asx.com

Market analysts and RBA soothsayers are split today on what the next move for the RBA will be.

The potential hike would be the 13th consecutive raise which would bring the cash target rate to a decade-high of 4.35%.

Here are some thoughts circling at banking and investment firm watercoolers:

• Westpac chief economist Bill Evans says the RBA regards higher rates as necessary to ensure inflation falls to target by mid-2025.

‘We’re expecting you will see negative [GDP] growth in the first quarter of next year,’ he said.

• Commonwealth Bank split from the big four’s consensus that a raise is likely and thinks a pause may come today and a raise in August instead.

‘The deceleration in the monthly CPI should be enough for the RBA to pause its hiking cycle.’

‘Although today’s stronger housing related data could, together with a tight labour market and lingering inflation concerns, tip the decision the other way.’

• CeditorWatch chief economist Anneke Thompson said if the RBA didn’t raise rates today, it would risk sending a signal that rates were over. She added that there were serious risks in raising.

‘The flipside risk is if they increase again, that [for] people holding a home loan and particularly those that bought in the last two years, you make things far too difficult for them’

• AMP deputy chief economist Diana Mousina remarked that interest rates were the only tool the RBA had for slowing consumer spending and that other mechanisms needed to be found.

‘Some European countries are looking at … measures implemented by the government that can control inflation because the burden on mortgage holders just seems to be unfair’

• UBS Australia’s chief economist George Tharenou — who has successfully predicted the last 11 RBA decisions, thinks we’re in for a pause due to the dovish nature of the last RBA minutes and the recent CPI numbers, which fell from 6.8 in April to 5.6 in May.

‘The board is signalling that they need to be convinced, when policy is already restrictive and there are significant lags from the fixed mortgage rate cliff, that further increases in interest rates are actually required’

 

ASX 200 may open slightly up today as investors remain cautious as we await news from the RBA today on whether interest rates will remain at 4.1 per cent or rise to 4.35 per cent — a decade high.

Mortgage holders will be closely watching today’s decision as the RBA ponders a potential 13th interest rate rise in 15 months.

We will be awaiting the call from the RBA around 2.30pm.

It appears markets are pricing in another hike in the name of curbing high core inflation after May’s CPI data showed sticky inflation remained in place for some goods and services.

All figures shown are from 9:40am AEST

• $AUD up +0.11% at 66.76 US cents
• ASX futures up +0.43% to 7,218.5
• S&P 500 up +0.12%
• NASDAQ up +0.21%
• DOW up +0.032%
• FTSE down -0.39%
• STOXX up +1.70%
• SSE up +1.31%
• Bitcoin up +1.70% to $US 31,098.05
• Spot gold up +0.10% to $US 1,921.27
• Iron ore down -0.04% to $US 112.57
• Brent Crude down -0.76% to $US 74.84pb