The Friday Market Wrap - 24 February
- Australia’s wage price index rose 3.3% year-on-year during the fourth quarter of 2022, up from 3.2% rise in the third quarter. Compared to market expectations of 3.5%, the current reading was below expectations despite improved business conditions. Wages in the private sector rose 3.6% (highest since the third quarter of 2012) whilst, in the public sector, wages rose 2.5%. Softer-than-expected wage growth is still unlikely to change RBA’s fear of a wage-price spiral considering the tight labour force and strong consumer spending in January
- Minutes of the FOMC’s February minutes were released with nothing new coming out of them. Almost all participants favoured a 25bps rate hike with a clear theme that rate cuts are not coming any time soon. Inflation levels are moderating but still well above Fed’s target. Large emphasis on financial conditions which has eased over the last few months. Officials cautioned that unwarranted easing in financial conditions will complicate the committee’s effort to restore price stability.
- About 65% of ASX 200 companies have reported so far with aggregate earnings growth down 13.8% from the previous corresponding year. Just over 28% of the reported companies delivered positive earnings surprises. Materials and communication services sector in reported negative earnings growth of 16% and 69% respectively whilst real estate and health care reported earnings growth of 13.5% and 34% compared to last year
- New capital expenditure in Australia rose 2.2% over the quarter to December, smashing expectations of 1.3%. The steepest increase in new capital spending was seen in buildings and structures, rising 3.6%. Industrial expenditure for equipment and machinery also grew 0.6% over the December quarter following a 1.2% decline. Another data point shows resilience in the Australian economy.