The ASX is set for a muted start to trading as investor counterparts in the US contemplate the latest CPI data. Sentiment wasn’t helped by a fake inflation data document, which was circulating a day ahead of the actual release, the Financial Times reports.
The Dow, the S&P 500 and the Nasdaq were all down by one per cent or less overnight. There were larger falls on iron ore (-7.2%), US oil (-8.2%) and Brent crude (-7.6%).
Only Europe bucked the flat trend, with the Stoxx 50 trading 0.4% higher, the FTSE adding 0.2%, the CAC up 0.8% and the DAX up 0.6%.
Consumer confidence drops again
Consumer confidence is down again in July, said the Westpac Consumer sentiment index, slipping 3% to 83.8 in July, from 86.4 in June. This represents the seventh consecutive month the index has gone in the wrong direction – it hasn’t pointed upwards all year.
The slumping confidence coincides with a gradient of rising rates and inflation not seen in the Australian economy since the Global Financial Crisis and the COVID-19 pandemic.
Meanwhile, there’s a fair bit of geopolitical activity for the new government to turn its attention to.
Pacific Islands Forum
The Pacific Islands Forum, currently convening in Fiji, is set to be of strategic importance for Australia and its neighbours.
The forum is meeting for the first time in three years, and there are hopes it will rejuvenate ties between regional partners at a time when regional security and the looming shadow of climate change – which many island nations view as their primary existential threat – are high on the agenda.
In the lead-up to the meeting there had been intense speculation about the reasons for Micronesian nation Kiribati’s withdrawal from the talks, at a time when there is jostling for dominance of the region and the PIF needs to demonstrate unity and strength.
US vice president Kamala Harris addressed the meeting virtually, acknowledging that the US hasn’t given nations in the region the attention they deserve in recent years and vowing to deepen engagement in the Pacific.
Energy pact signed with the US
In keeping with its renewed Asia-Pacific focus, the US Government is also moving closer to Australia on energy policy.
On the sidelines of this week’s energy forum in Sydney, the two nations signed a ‘net-zero technology acceleration partnership’ aimed at challenging China’s dominance in the clean energy technology space.
Minister for Climate Change Chris Bowen told the ABC this morning that the pact will focus on grid integration and hydrogen, among other technologies, adding: “The Biden administration and the Albanese government are very closely aligned on climate and I think the agreement we signed is a reflection of that.”
He went on to discuss the market concentration of solar energy technology in China.
“For any country to have 80% of production of solar cells and rising to well over 90% in just the next three years is an issue that needs to be tackled, whether it’s China or any other country – that’s a massive concentration and a risk to supply chains.”
Bowen said that of the 60 million solar panels that were placed on Australian roofs in the last decade, 1% of them were made in Australia, which was in his view not sustainable.
The minister said that an injection of funds into renewable technologies under the National Reconstruction Fund, along with the Battery Manufacturing Precinct in Queensland, would move Australia, as the largest source of lithium in the world, towards greater self-sufficiency on this front.
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