AU Weekly Wrap | ASX 200 reversed its five-day winning streak; Australia's key inflation measure eased to near the RBA's target band

Moomoo News AU wrote a column · Jan 10 17:52

AU Weekly Wrap | ASX 200 reversed its five-day winning streak; Australia's key inflation measure eased to near the RBA's target band

Market Review

ASX closed lower on the last trading day of the week, influenced by a somber outlook for Wall Street ahead of a crucial jobs report. $S&P/ASX 200 (.XJO.AU)$ finished at 8294.10 points, an increase of 0.53 per cent or 43.6 points this week. The index rose over five days, ending the week 0.53 per cent higher despite some gains being reversed on Friday. Across the week, seven out of the 11 sectors saw increases, with the Materials sector leading the way, posting gains of 0.96% for the week and 0.71% over the past five trading days.

Macro News

Australia's Primary Inflation Measure Eased, Making a Rate Cut a Possibility

In November, a key Australian inflation metric dipped closer to the Reserve Bank's target range, hinting that the central bank might be poised to consider interest rate cuts imminently. According to data released by the Australian Bureau of Statistics on Wednesday, the trimmed mean core measure, which filters out erratic items and is closely monitored by the Reserve Bank, decelerated from 3.5% the previous month to 3.2%. This development has led to a decline in the Australian currency.

Economists generally anticipate that the Reserve Bank of Australia's forthcoming action will be to ease interest rates. However, there is disagreement on the timing due to the persistent core inflation and the unpredictable global economic landscape. The full set of price data for the December quarter is expected to be released later this month, which will be a crucial factor for the RBA's meeting scheduled for February 17-18.

Australian Retail Sales Rose on Black Friday, but Fall Short of Expectations

November Australian retail sales experienced their largest increase in 10 months, driven by Black Friday discounts that attracted budget-conscious shoppers. However, the overall sales figures did not meet expectations, indicating that consumer demand remains relatively subdued. According to data from the Australian Bureau of Statistics (ABS), retail sales rose by 0.8% in November compared to October, when they had increased by a revised 0.5%. Analysts had anticipated a stronger gain of 1.0%. On an annual basis, sales increased by 3.0%, totaling A$37.1 billion (US$23 billion).

The ABS noted that promotional activities now span the entire month of November, which has diluted the impact traditionally seen over the Black Friday weekend. Department store sales saw a significant increase of 1.8%, while spending at cafes and restaurants rose by 1.5%. Despite the boost from Black Friday, the overall sales growth was not as strong as forecasted, suggesting that consumer spending is still cautious.

Company News

Rio Tinto's Acquisition of Arcadium Lithium Gained US Approval

$Rio Tinto Ltd (RIO.AU)$ proposed acquisition of Arcadium Lithium has received clearance from the Committee on Foreign Investment in the United States (CFIUS), as announced by Arcadium Lithium on Wednesday. However, the transaction is still pending investment screening approvals in Australia, Canada, and Italy, along with other standard closing conditions. The deal is anticipated to be finalized before mid-2025.

Star Entertainment Dived to an All-Time Low Due to Cash Drain

Shares of $The Star Entertainment Group Ltd (SGR.AU)$ reached a new record low after the Australian casino operator warned of significant cash burn. The company reported that its available cash had dwindled to 79 million Australian dollars, or about US$49 million, as of December 31, 2024. This followed a cash outflow of approximately A$107 million during the last quarter of 2024, which included spending on new debt and other obligations. The decline in cash reserves reflects ongoing challenges in attracting customers, regulatory issues, and substantial financial losses over the past two years, as the company has struggled to maintain its license for the Sydney casino.

CC Capital Partners Made $1.8 Billion Takeover Offer for Insignia Financial

Australian wealth manager $Insignia Financial Ltd (IFL.AU)$ has received a takeover proposal worth approximately US$1.8 billion from CC Capital Partners, a private investment firm established by former Blackstone dealmaker Chinh Chu. This offer comes roughly two weeks after Insignia rejected a US$1.7 billion takeover proposal from Boston-based Bain Capital, stating that it undervalued the company. Insignia is currently considering whether it is in the best interests of shareholders to engage with CC Capital.

CommBank Moved Customers to New Accounts Without Prior Regulatory Notification

$CommBank (CBA.AU)$ failed to formally notify regulators before moving 1 million customers to new accounts, which would incur additional transaction fees, according to a report by The Australian, citing Freedom of Information requests. Both the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) confirmed they had no formal communication from CommBank regarding this move. In December 2024, the bank announced plans to migrate these customers to Smart Access accounts, which would charge a AU$3 withdrawal fee at bank branches. However, the migration was paused due to public backlash, with the bank admitting they did a "poor job of communicating" the changes.

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