As expected, the ASX has dropped today.
The S&P/ASX200 23.60 points or 0.32% to 7,292.70. The index has lost 0.94% for the last five days, but sits 3.63% below its 52-week high.
Bottom-performing stocks in this index are Syrah Resources Ltd (ASX:SYR) and Core Lithium Ltd (ASX:CXO) down 9.19% and 5.03% respectively.
Most sectors were in the red, with Communication Services bucking the trend to move up 0.20% and Utilities 0.24% higher, while Consumer Discretionary was the worst performed sector losing 0.84%.
All eyes on interest rates
As we near the April finish line, all eyes turn to what the Reserve Bank will do next week.
We know the headline inflation figure is still high, even though inflation has peaked and CPI data is looking better.
As a side note, the Bank of Japan (BoJ) meet tomorrow, here’s what City Index senior market analyst Matt Simpson had to say about what to look for.
“Tomorrow is the first monetary policy meeting for the new BOJ Governor, Kazuo Ueda. In all likelihood, the BOJ will keep policy unchanged and stick to their ultra-dovish stance, given public comments from Ueda have indicated as much.
“However, that’s not to say we should completely drop our guard and discount the potential for a lively meeting. The BOJ loves the element of surprise. Last week, a former BOJ member even suggested the BOJ could ‘surprise markets’, amidst reports that the BOJ is considering tweaking their YCC policy ‘later this year’.
“If anything, they seem to be laying the groundwork for change and a gentle let-down ahead of tomorrow’s meeting. We should remember that inflation is softening, and previous minutes revealed a discussion on tweaking YCC, hence the call for policy to remain unchanged tomorrow.”
The ‘will they, won’t they’ sentiment is similar for the RBA’s May meeting.
Some analysts are predicting a final rate rise 0f 0.25%, while some say yesterday’s CPI data is enough to hold steady.
How do consumers feel about another rate hike?
The RBA’s May 2 rate decision has given many borrowers a sense of foreboding uncertainty as people become more and more concerned for their financial future.
New research from Money.com.au reveals that 70% of Australians would have changed their minds about taking out a new home, car or personal loan if they were in the market for such a loan in the last year – and only 15% think rates will start to come down this year.
Money.com.au surveyed an independent panel of 1,010 Australians and found that 45% of survey respondents agree that the higher cost of living and growing interest rates would have prevented them from getting a new home loan, despite the consideration that property prices tend to come down when home loan interest rates go up.
Younger Australians are reportedly more cautious than the other age groups surveyed, with 58% of 18-30s agreeing that they would have been put off from getting a home loan this year. This compares with 50% of 31-50s and just 34% per over-50s.
When considering that the younger demographic is more likely to be purchasing their first home, it could be because they do not have the financial assurance to secure higher interest rate payments, or they may be holding off for housing prices to come back down.
Licensed financial adviser and Money.com.au spokesperson Helen Baker says Aussies may be seeking personal loans to consolidate their debts.
"There’s no doubt a sizeable proportion of households are experiencing financial hardship in this current environment. For those seeking ways to manage their debts – for example, individuals with multiple credit card debts – it might be preferable to re-organise debts into one regular payment, but borrowers must ensure they are committed to making these repayments.
“For those with no surplus income, finance could be their only option if they need a new car for work, for example. But in these instances, I’d advise taking serious caution and only taking out a loan to which you can comfortably pay off.”
As for interest rate movement, only 15% of Aussies think the RBA will bring down interest rates this year.
The highest percentage of respondents (24%) believe April was an anomaly and rates will continue to rise over the next few months, and 17% think the RBA will raise rates by smaller percentage points in the next few months.
Only 15% think last month’s decision is a sign that rates have almost peaked and will start to come down before the end of 2023. Just over a third (37%) of Aussies believe the RBA will hold the cash rate for at least another month this year: 18% believe the rate won’t move on May 2 and 18% believe there will be a few more months this year when rates will be held by the RBA.
The concern is trust.
60% of Aussies don’t trust the RBA will get it right.
“Because the RBA went against their promises, after saying they wouldn’t touch rate rises till 2024, it is understandable that the public is confused and lacking trust in the institution,” Baker said.
“The RBA is now under a lot of pressure for their upcoming review in May. If the RBA does end up increasing rates throughout the year a fixed rate may be more advantageous, but if they suddenly come down, borrowers could be left high and dry.”
The full survey results, including age and State breakdowns, can be found here: Money Matchmaker® | How are rate rises impacting Aussies’ borrowing plans?
Bond, Australian Bond … Exchange
The Australian Bond Exchange is attempting to cut the time it takes to settle bonds.
Following recent coverage on CBDC testing, Australian Bond Exchange today presented a live demo of its direct-to-client self-service bond trading platform, as part of a joint research project to explore use cases for a central bank digital currency (CBDC) run by the Reserve Bank of Australia (RBA).
Bonds currently settle on a Trade + 2 days basis, however when CBDC is used as a settlement asset, Australians will have the ability to trade and settle bonds in near real-time (typically less than 5 seconds).
“We are proud to be taking part in the CBDC Pilot Program to explore new methods of delivering economic and social value, with support from the RBA and key regulators,” CEO Bradley McCosker said.
As demonstrated in today’s first live demo, ABE has a bond trading platform targeted at retail and institutional investors which is connected to a Transaction, Execution and Settlement Engine (TEASE) which has illustrated proof of concept in the CBDC’s sandbox environment.
“The success of today’s live demo is a significant step forward in reducing the world bond settlement time from T+2 days to near real-time, in alignment with our goal to make bonds more accessible to Australian private investors. This technology will reduce counterparty risk, reduce settlement failure risk and enable atomic settlement of transactions,” McCosker said.
“More broadly ABE supports the RBA’s goal of creating digital currencies which can facilitate commerce in the emerging blockchain economy and benefit the Australian financial system and economy.”
The live trades will be performed in May using real eAUD, followed by a final demo day to mark the conclusion of the pilot program at the end of May. A report on the findings, including an assessment of the various use cases developed, will be published at the conclusion of the project.
Five at five
Azure Minerals intersects more broad gold in follow-up drilling at Barton
Azure Minerals Ltd (ASX:AZS) has encountered broad zones of gold mineralisation in follow-up drilling at Daisy Corner prospect within the Barton Gold Project in the Eastern Goldfields of Western Australia.
Great Boulder Resources flags expansion potential at Mulga Bill gold deposit
Great Boulder Resources Ltd (ASX:GBR) is honing in on untested gold to the east of the Mulga Bill deposit in WA thanks to a recent aircore drilling program.
NickelSearch adds $220,000 in EIS co-funding to war chest for Carlingup exploration
The value of nickel exploration efforts by NickelSearch Ltd (ASX:NIS) has been recognised by the Western Australian Government with the award of up to $220,000 in an Exploration Incentive Scheme (EIS) co-funded drilling grant.
Toubani Resources reports positive results from drilling at its Kobada gold project
Toubani Resources Inc. (TSX-V:TRE, ASX:TRE) has reported positive results from its drilling program at the Kobada Gold Project in southern Mali, highlighting 6 metres at 0.85 g/t gold, including 2 metres at 1.70 g/t, 1-metre at 3.58 g/t and another 1-metre at 3.35 g/t.
Talon Energy's coal seam gas farm-in spuds first well in Mongolia; “strong coal thickness” observed
Talon Energy Ltd (ASX:TPD) welcomes progress by partner TMK Energy Ltd with the Gurvantes XXXV CSG Project’s pilot production well drilling program in the South Gobi Basin of Mongolia proceeding to plan.
On your six
Investment scams top list with $1.5 billion in financial losses for Australians
In a worrying trend, Australian authorities have received more than 500,000 reports of scams in 2022, resulting in reported losses of more than $3.1 billion, according to a report compiled by the Australian Competition and Consumer Commission.
The one to watch
Chimeric Therapeutics thrilled with ethics approval for brain cancer study
Chimeric Therapeutics Ltd (ASX:CHM) CEO Jennifer Chow tells Proactive the company has the ethics review board’s green light to initiate a multi-site Phase 1B clinical trial of CHM 1101 in patients with recurrent and/or progressive glioblastoma multiforme (GBM).