Australians will have to eat more avo with “avocado per capita” to reach 22 this year, agribusiness bank Rabobank says. Production is also poised to surge in the next five years, with more avocado trees reaching full yields. The previous season translated to bumper crops, and an increasing maturity of avocado trees has meant enlarged supply of the fruit. The popular fruit now costs around $1 each. To fix the problem, the bank says Aussies will need to eat more of the avo, and export more of the fruit as well. It’s cause for celebration that perhaps something, anyway, is getting cheaper in inflationary times.
Rio disappoints
Rio Tinto Wednesday posted a 29% first half drop in profit as iron ore prices drop and Chinese demand falls. The dividend has been held firm, with the second highest interim pay-out on record. Iron ore prices have been declining since hitting $161.84 a tonne in April. Worries about a worldwide recession and covid lockdowns in China have sapped demand for steel. Rio shares fell 1.55% following the earnings announcement, but the miner still leaves the week 1.6% higher.
All aboard the Kogan express
Kogan’s shares surged as much as 48.3pc on Thursday after the e-tailer issued a business update for the last financial year. The report demonstrated that gross sales increased 0.1% at the same time rising inflation and interest rates. Founder and chief executive Ruslan Kogan conceded that consumers are changing their habits. “Times are changing. ‘You have to pay the bills, but also find a way to reinvent the company,’” she said, adding that in uncertain times, “people don’t want to change their life-style, but they’re definitely fine with changing the way they shop.” Johannes Faul, an equity analyst, said he expected “e-commerce sales to significantly outperform in-store retailing sales in the next10 years.” He thinks the company is well positioned to capitalize on robust growth in the online retailing space. Other consumer discretionary companies have also enjoyed positive sales growth of late with JB HI-FI and Myer both showing a 10.9% sales increase over the quarter and a 17.3% sales jump over the last six months respectively. On Thursday, Kogan shares closed at $4.65, marking its highest price in three months.
Recession fears rise
American data revealed the US economy contracted for a second straight quarter. The Commerce Department released figures on the same day as the Fed meeting, which was on Thursday, showing that US gross domestic product dropped 0.9% after a rise of 0.1%. Today’s decline in GDP for the quarter follows a 1.6% decline in Q1. By the technical definition of two consecutive quarters of negative growth, it’s a recession. But the US National Bureau of Economic Research's recession watchers say it's not good enough, looking out for falling output and rising inflation. This is a dilemma for the Federal Reserve as it tries to tame surging inflation in the United States. Speaking to the reporters in Washington before the release of the commerce department’s GDP data, Powell said “I don’t think the US is currently in a recession”. “There are too many sectors in the economy that are doing too well,” he added.
Russia reduces gas supply to Europe
Gazprom has cut flows on the Nord Stream pipeline by 20% this week. The reduction and continued lack of clarity over if and when gas supplies will be returned or if and when they will return to normal levels have raised concerns in the EU as winter approaches.
Phone in hand. US tech giants have released earnings.
A slew of US technology giants have reported earnings this week with tech titans Alphabet and Meta falling short of earnings expectations. Alphabet on Tuesday reported results for the first full quarter under the pandemic and said that revenue had grown by 13 percent in that period, but that it missed market expectations for YouTube advertising and Google cloud revenue. Meta also announced slumping numbers. Ad spending dropped, leading the parent company of Facebook and Instagram to its first revenue decline. Overall revenue for the company dropped 1% compared with first quarter results. Apple was an outlier with better-than-expected earnings. The revenue was up 2 per cent year-on-year to US $83 billion with better-than-expected revenue from iPhone and iPad. Apple ended the week up 2.1%, closing at US $157.35 on Friday.
Inflation on the rise again in Australia
ABS Released on Wednesday ABS data showed prices increased 6.1% during the June quarter in Australia. On a year-over-year basis, prices rose the most in transport, housing and food by 13.1, 9 and 5.9 per cent respectively. The biggest quarter-on-quarter jump was clothing up 3.5%. This is the most Australia has had to fear inflation since the 2% to 3% target band was introduced in 1996.
RBA Makes a Move on Rising Inflation
The RBA looked at rapid inflation and started raising rates to beat back the cost of living. The RBA meets next Tuesday and another rate rise is coming.
ASX done for month but finishes strong: Market Wrap with AAP
The Australian share market has ended a strong month on a high, with all but a small handful of its sectors gaining ground.
The S&P/ASX200 benchmark index closed higher by 55.5 points, or 0.81 per cent, to 6945.2 on Friday while the All Ordinaries index finished higher by 57.9 points, or 0.81 per cent, at 7173.8.
For the week, the ASX200 was 2.26 percent higher, while for the month it added 5.7 per cent to an almost seven-week high in its best monthly performance since March and its second best in the past year-and-a-half.
“The market didn’t do too much from Monday through to Wednesday, but the last couple of days we’ve actually seen gains around the 1 percent area and I think that was fairly strong,” said CommSec market analyst Steven Daghlian.
“We’ve made up two-thirds of the drop that we had in June, so we still have a lot of substantive work to do. And, of course, it comes on the heels of our worst since the beginning of the pandemic as well.
“And since the beginning of this year as well we are still well in negative territory,” Mr Daghlain added. The ASX200 index is 6.7 percent lower so far this year.
The gains on Thursday and Friday came after second-quarter Australian inflation was released softer than expected and amid speculation the US Federal Reserve would pause its hawkish rate hikes.
Property was the strongest sector on Friday, rising 2.9 percent as Goodman Group advanced 4.6 per cent and Vicinity Centres gained 2.5 per cent.
The heavyweight sector of miners rose 1.0 per cent, as BHP increased 0.9 per cent to $38.68, Rio Tinto improved 0.1 per cent to $97.83 and Fortescue declined 1.9 per cent to $18.34.
Goldminers Evolution, Northern Star and Newcrest rose between 3.7 and 4.8 per cent as the price of the precious metal rose to a two-week high of $US1765 an ounce. Evidence of a downturn in the US economy is inflating the appeal of the safe-haven asset.
All of the big banks were higher, three by an identical percentage. Commonwealth, ANZ and NAB all gained 0.9 per cent higher to $100.77, $22.90 and $30.60, respectively. The strength at Westpac helped the bank sector as a whole and it added 0.4 per cent to $21.51.
Insurers had a subdued day, with IAG down 1.1 per cent, QBE dropping 2.9 per cent, Medibank Private dipping 0.9 percent and Suncorp backtracking 0.5 per cent.
CSL was 0.5 per cent lower at $289.84 as the Aussie rose against a fading US dollar – the currency in which the blood products giant earns much of its revenue.
Origin Energy rose 4.2 per cent to $5.94 after the energy giant said full-year revenue from its Australia Pacific LNG joint venture with ConocoPhillips and Sinopec had doubled on higher spot prices.
A super three-day rally in buy now pay later businesses has finally run out of puff, with Zip falling 25 per cent, Sezzle down 19.6 percent and Laybuy falling 23.3 percent.
That leaves Sezzle, up 173 percent this week and Layby, up 150 per cent – mind you, they’re also obviously a long way off their 2021 highs.
