• Both the US S&P 500, and the ASX 200 made new record highs in February, currently insulated from the weakness in the Chinese markets, for now.
  • Reserve Bank of Australia (RBA) expect inflation to decline to the 2–3% target range in 2025 and reach the midpoint in 2026. Services inflation remains high and only expected to decline gradually.
  • The RBA kept the cash rate unchanged following their February meeting at 4.35% but did not indicate whether there will be an easing in interest rates.
  • If the RBA’s forecasts are right, the inflation rate will be close to 3% and the unemployment rate will be over 4% by the end of 2024, then an interest rate cut is on the cards.
  • Australian business conditions PMIs (survey of business conditions) for February rose with strength in services (possibly driven by optimism regarding a boost from Swiftonomics) but for the last 18 months they have been range bound around zero.
  • Globally PMIs were mixed across major countries – up in Europe (but still soft), and the UK but down in the US and Japan (but to still okay levels).
  • Australian December half year earnings reporting season came to close with 46% of companies surprising consensus earnings expectations on the upside and 36% surprising on the downside, better than the long term average for both of around 41%.
  • 53% of Australian companies have increased their dividends on a year ago, below the norm of 59% and greater than usual 31% have cut their dividends, which suggests an overall degree of caution.
  • Around 90% of US S&P 500 companies have now reported December quarter earnings with 76.5% coming in better than expected, which is just above the norm of 76%.
  • US earnings growth for the quarter is running around +9.6% y-o-y, well up from consensus driven by technology companies (+40%) and financials (+11%) with resources earnings down 21%.
  • Wall Street continues to be bolstered by Mega-Caps, particularly key components of the “Magnificent Seven” including, Meta +26%, Amazon +14%, and Nvidia +29%.
  • Unlisted commercial property returns are likely to be negative due to the lagged impact of high bond yields and WFH.
  • Australian home prices continue to show resilience on the back of supply shortage and by the prospect of lower interest rates later this year boosting buyer confidence.
February 2024 Download Report