The Federal government released a cost-of-living focused budget on Tuesday and analysts at Morningstar and UBS have tipped several sectors to benefit. A fuel excise cut, and then $17.9 billion in infrastructure spend and cash handouts remain at least short-term positives for retailers such as Coles and infrastructure types such as Downer. Peter Warnes at Morningstar says any assistance to retailers is likely to be short lived because the cost-of-living policies are temporary.
Traders in Shanghai Are Rummaging for Old Sleepers as City Makes Zero-Covid Leap
Banks in Shanghai pressed staff and their sleeping bags into offices on Monday as the Chinese government continues to battle the country’s latest covid outbreak. Traders are observing how China’s lockdown will affect iron ore demand and already struggling supply chains. Pure-play iron ore miner Fortescue Metals dropped over 10% in the early days of March when lockdowns were first announced, before recovering to end 14% higher for the month.
Andy Penn of Telstra says farewell to an era
Telstra said on Tuesday its chief executive Andy Penn is set to step down in September. He has spent seven years negotiating a rollout of a broadband network and a price war in 4G mobile. His blessed successor is his own chief financial officer, Vicki Brady. It intends to transform it into a growth company, the former public telco at 30 years old now. Telstra shares fell 0.9% to close at 390 cents on Wednesday. They ended the week up 0.8%. Morningstar’s Brian Han retained the outlook for Telstra’s fair value and said Brady was well qualified to execute the company’s strategy.
CLIMATE CHANGE: Government supports tech in fight against climate change
A range of low emissions technologies including hydrogen will benefit from the 250-million-dollars allocated in Tuesday’s budget toward fostering private investment in space. In his address, Federal Treasurer Josh Frydenberg reconfirmed the government’s preference for technology over taxes. It comes as big Australian companies like Fortescue Metals and Woodside Petroleum spend billions in green hydrogen investment. The Climate Council described the federal budget’s attitude toward climate change as “a missed opportunity.”
Bond market sees all rate hikes Barron’s
Cash rate forecasts spiked this week as bond traders wagered that the RBA will lift quicker and higher than previously expected. Rate futures now expect the cash rate will rise to 1.74% in December 2022, up from 1.67% on Tuesday. Today’s cash rate is 0.1%. And traders might have been reacting to Tuesday’s fresh spending plan, which outlined billions intended to alleviate rising prices. Philip Lowe, the Reserve Bank governor, has previously scolded bond markets for being too aggressive in their rate hike expectations. The cash rate is expected to reach 0.75% in December 2022, according to economists at UBS and AMP.
Fortescue Metals said on Wednesday it had clarified comments from founder Andrew Forrest after a green hydrogen agreement with German utility E. ON. Forrest kinda mentioned the half century in passing as he inked a deal with the firm to help substitute Russian gas with Australian green hydrogen. Within hours Fortescue issued a statement clarifying that “there is no commitment to this expenditure.” Fortescue’s green hydrogen plans leave uncertainty in their wake. Mathew Hodge of Morningstar says more detail is needed in order to assess how much value it may bring.
ASX slips but higher on week: Market wrap
Australian shares rose for a third straight week as strength in commodity prices trumped nerves over an increasingly hawkish U.S. Federal Reserve.
The ASX dropped 0.1 per cent on Friday, its second straight small loss after a string of seven straight days of gains ended mid-week. For the week the benchmark increased 1.2%, with resources and consumer staples the best performers, up 3.7% and 1.2%, respectively.
The strength in US equity markets later in the week was offset locally with a massive move higher in commodity prices as Federal Reserve officials talked up the prospect of being prepared to do more, said Jun Bei Liu, the portfolio manager of the Tribeca Alpha Plus Fund.
“Australian equities are holding up well,” she says. “The commodity complex tends to do pretty well in inflationary circumstances.”
Commonwealth, Westpac and ANZ lost 1.2% to 1.5% on Friday after data offered fresh evidence that the house-price boom might be ending.
In company news, a planning panel in NSW has approved an extension of Whitehaven Coal’s mine at Narrabri.
