Farhan Badami, Market Analyst at eToro Group Ltd, shares his three things to watch in Australia in the coming days.
AU unemployment and RBA meeting minutes
September unemployment figures arrive on Thursday, and markets aren’t anticipating any surprising shifts. For most of this year, unemployment has held steady around the 4.2% mark, even as productivity and business confidence indicators paint a less certain picture of the Australian economy.
With CPI jumping significantly and unexpectedly, the stable unemployment rate can be difficult to explain at face value. The ABS has made it clear that, despite job creation stalling, a large volume of people leaving the labour force has been a partial driver in monthly figures appearing more stable than the on-the-ground job hunting experience seems to suggest.
Still, it’s the number, not the context, that the RBA seems to prefer when considering rate calls, and so a steady unemployment figure does create some optimism for those hoping for an additional rate cut before the end of the year. Sticky inflation has all but taken a late-September cut off the table, but there’ll be two more meetings on monetary policy before the end of the year. If CPI comes back towards a target range and we see unemployment continue to hold steady at around 4.2%, a November 25bps cut is a firm possibility.
US inflation
Inflation is rearing its head once again in the US, with the last round of data indicating prices jumped by 2.9% over the last year. This is largely driven by the impact of tariffs, with the heightened cost of business logistics now being passed on to consumers. Still, the Fed cut rates in September, and meeting minutes indicated more cuts are in store for 2025, which has clearly kept markets optimistic.
The Fed’s run of public addresses last week was marred by a lack of timely data due to the government shutdown. The impact of the shutdown has now extended into this week, with employees being called back specifically to produce CPI data – but the release is now scheduled for next week. This highlights the importance of these quarterly indicators, particularly with the November 1 deadline for the Social Security Administration's annual cost-of-living adjustments report (a document that relies on up-to-date CPI data) approaching quickly.
The US labour market still shows signs of cooling as the unemployment rate continues to tick upwards, but the longer-term message from the Fed seems to be one of optimism. Markets will be holding on tightly to that glimmer of hope, especially given there is still no firm end in sight to the current government shutdown.
TSMC earnings
The stage is set for a pretty promising result when TSMC releases its Q3 earnings results this Thursday.
Last week’s sales preview indicated a strong surge in revenue for the chipmaker, and markets responded proportionately, providing the company with a healthy boost in share price. The stock now sits at TWD$1,440, up 35% YTD.
This success has largely been driven by the ongoing AI boom, which continues to provide rewards for investors. In Australia, TSMC is the thirteenth fastest climbing stock in eToro’s quarterly top stocks report, with a 9% increase in local holders in Q3. It’s also the 13th most held stock on the eToro platform in Australia.
Huge firms like Microsoft, Google, and Amazon are pouring money into new data centres, which ultimately means more orders for TSMC, thanks to the fact that it is the linchpin behind the chips that Nvidia delivers.
TSMC’s long-term story remains compelling. It’s hard to find another company that is critical to tech, yet operates somewhat behind the scenes with limited direct competition at its level. It’s hard to see anything but a positive outcome from Thursday’s earnings.