The Weekly Finance Wrap-up

Nonprofit Investment Consulting

With the US earnings season beginning, the discussion is continuing as to whether the Reserve Bank of Australia will cut interest rates and the never-ending question of when it will happen. 

Sporting events, global hospitality and air travel are continually a topic in the summer of 2024, with the Australian Open in its first week of games.  

In comparison, market reports are very much still focused on inflation, interest rates, current spending and consumer trends. The reports are steadily focused on whether interest rates and inflation will decrease over the coming months. The next Reserve Bank of Australia meeting is the first Tuesday in February, with investors watching closely. 

China GDP Results 

The key news story for the week from Davos was the Chinese GDP figures, with the Premier Li Qian announced China’s GDP figures a day early. Data indicates China reached its economic goal for 2023 as industrial production and investment climbed in the final stretch of the year. Now the focus is turning to what policymakers will do to support growth going forward. 

Global summits are proving to be in headlines, with World Economic Forum in Davos hosting many global leaders and businesses, many CEOs from the Australian natural resources sector in attendance.  

China’s President, Xi Ji Peng, announced Gross Domestic Product grew by 5.2 per cent last year, data released by the National Bureau of Statistics showed on Wednesday, matching the rate that economists had expected in a Bloomberg survey. Beijing’s official target was “around 5 per cent.” 

GDP Growth Chart

US Earning Season, Jobs Growth and Inflation 

Continuing the discussion this week, with earnings season in early stages of commencement, investors and analysts alike are watching with bated breath.  

We will see what occurs over the next few weeks to gain more of an understanding of what is in store for the markets. Analysts are keenly watching the US Election and the Iowa Caucus, given the latest Trump win, while the US interest rates and inflation are raising many questions about when these will decrease, or if they will decrease.  

With a US Government shutdown deadline midnight Friday, the US Senate hopes to easily approve a new extension to fund the business of running the country. With snow expected tomorrow in DC, the House may try to pass Senate bill late tonight. A Government shutdown should be avoided. 

US Auto Insurance continues to be the largest contributor to US inflation data.  

Watch this space- expect this to moderate.

Motor Vehicle Insurance Graph

Robust US employment  

US initial claims for unemployment benefits slid to their lowest level since 2022, casting further doubt on whether the US central bank will cut rates soon. Financial markets are pricing in a 56 per cent chance that the Federal Reserve will ease in March, down from 70 per cent last week. 

The European Central Bank (ECB) warned in minutes from its most recent meeting that it was far too soon to discuss policy easing. Atlanta Federal Reserve President Raphael Bostic said he was open to reducing rates sooner than he had anticipated if there is “convincing” evidence in coming months that inflation is falling faster than he expected. 

In commodities, iron ore prices rebounded on the hope China would do more to bolster its economy, and oil gained amid widening Middle East tensions. 

Global Sporting Events 

Sport is a leading topic, with the Australian Open in Melbourne, global and local hospitality stars, restaurants and premium hospitality suites are all within the Australin Open Precinct. This is drawing large international and national tourist numbers. AFR states the current rates of corporate attendance are set to break the 2023 records, with predictions of a 21 percent increase on business travel over the Australia Open in comparison to 2023.  

Motor Vehicle Insurance Graph

Take a listen to last Tuesday’s Enterprise Me with Libbi Gore to gain further insight on the week that was with finance and economy from Siobhan Blewitt.