The ASX opened flat today, after a tech-stock sell-off pared back any Wall Street gains.
News from Bloomberg that Apple plans to slow hiring and spending in the coming year dampened trade in the US, with the tech giant losing 2.1% yesterday.
After early trading highs – up 356 points – the Dow Jones closed lower by 216 points or 0.7%, the S&P 500 lost 0.8% and the Nasdaq lost 92 points or 0.8%.
Fintech stocks on ice
Fintech stocks, thought to be the beneficiaries of pandemic-driven rapid digitisation of services, have suffered as investors grapple with interest rates, the threat of a recession, poor cash flow and untested business models.
The stocks were the focus of a Financial Times analysis which pointed out that shares in recently listed fintechs have fallen an average of more than 50% since the start of 2022, compared with a 29% drop in the Nasdaq Composite.
Market capitalisation for these companies has fallen $US156 billion ($228 billion) in 2022 – measured from an all-time high, about $US460 billion has been lost.
Unwelcome news from New Zealand
Fresh inflation figures from across the ditch are dire, sounding the alarm that there is more pain to come. New Zealand inflation figures have risen again, sitting at 7.3% for the 12 months to June. The Reserve Bank of New Zealand had predicted it to come in at around 7%.
Our own figures are expected to be slightly lower for the same period, but still above 6% – Westpac is forecasting 6.1%.
It’s worth noting that our neighbours are further down the track than we are on the rates front. The NZ cash rate is at 2.5%, while ours is 1.35%.
Analysts are tipping another 50-basis-point rise as a certainty, with the only question whether the RBA instead moves by 75 basis points.
Federal treasurer Jim Chalmers warned Australians to brace for a “confronting” budget update next Thursday, when he delivers a ministerial statement on the economy and budget outlook.
Rising interest rates are going to make the new government’s inherited debt – near three trillion dollars – that much more difficult to finance.
ANZ swallows up Suncorp
ANZ’s $4.9 billion bid to take over Suncorp’s banking arm has been accepted. Suncorp will continue as an insurance company.
The deal will push the relative minnow of the big four into third place, with 15.4% of Australian mortgages – $307 billion – behind Westpac (21.5% or $430 billion) and the Commonwealth Bank (25.9% or $517 billion).
The acquisition still has to pass state and federal regulatory red tape and is not expected to be finalised for at least a year.
The Australian Competition and Consumer Commission (ACCC) said it would closely examine the proposal before making a decision, and expects the merger authorisation application to hit its intray in about a month.
Where’s the fuel relief?
Australian motorists are hanging out for the recent global oil price drop to hit local bowsers. The price is expected to drop below $2 at some point, though a retail lag of around two weeks – which means a profit margin buffer – at gateway country Singapore, is the reason for the delay in price relief here.
“The longer they hold up their retail pump prices, as the Singapore and wholesale prices are falling, they increase their retail profit margins,” Geoff Trotter, general manager of petroleum price consultants FuelTrac, told the ABC.
Meanwhile, oil prices lifted again by 5.1% on Monday. Brent crude was up US$5.11 or 5.1% to US$106.27 a barrel, while the US Nymex crude price rose by US$5.01 or 5.1% to US$102.60 a barrel. It’ll be interesting to see if the retail lag works the other way.