- 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.