- Interestingly, the top three categories impacted by inflation include household fuels (electricity, kerosene, coal) +26.5%, International holidays +22.6%, and cheese +16.3%. In the June 2023 quarter, the annual CPI (consumer price index) was 6.0 percent, which was below the 7.0 percent increase observed in the March 2023 quarter. This represents the second consecutive quarter of declining annual inflation, a phenomenon referred to as 'disinflation,' following the peak of 7.8 percent in the December 2022 quarter. Additionally, the trimmed mean annual inflation rate was 5.9 percent in the June quarter, also lower than the 6.6 percent recorded in March 2023. So, can the RBA afford to slow down on future rate hikes? Well, it depends. The target CPI range is between 2-3%, and strong jobs data in June (double that of expectations) along with a tight labour market make it difficult to cut rate hikes completely. The Reserve Bank of Australia projects that headline inflation will drop to 4.5 percent by the end of this year and continue to decline to 3.1 percent by December 2024 – within striking range of target CPI.
- During the fiscal year 2021 – 2022, China imported a staggering 96 percent of Australia's total lithium exports, that’s right, 96 percent! Therefore, it’s only reasonable to assess the Chinese dynamic of supply and demand, to uncover drivers of lithium prices. Let’s begin. 1) China's recent decline in electric vehicle (EV) demand due to the removal of subsidies. 2) Chinese car dealerships have been slashing prices of traditional vehicles in anticipation of stricter emissions standards. 3) Previous inventory stocking has resulted in some potential buyers not replenishing their lithium stocks. Ok, what about this week – how have ASX listed lithium companies performed? Core Lithium's projected lithium production for FY2025 was less than FY2024 levels, due to processing plant and supply constraints. This unexpected news had a significant impact on the market, causing Core Lithium shares to plummet -25 percent from earlier in the week! The negative sentiment also spilled over to other ASX-listed lithium companies, including Pilbara Minerals, Liontown Resources, Allkem Ltd, and IGO Limited, all of which experienced declines ranging from 3 to 6 percent earlier in the week (some of which have clawed back previous losses).
- During the second quarter luxury behemoth LVMH surprised investors with a 1% drop in U.S. sales, as aspirational consumers pull back on luxury spending. This trend followed a 4% decline in U.S. sales across luxury companies in general. Wine and spirits, especially cognac, were the most affected category in the U.S., and LVMH faced challenges managing pricing and supply due to pandemic-related inventory issues. Contrastingly, LVMH experienced an impressive 17% surge in overall sales in China during the quarter, driven by a remarkable 34% increase in Asia sales excluding Japan. Despite signs of a broader economic slowdown in China, luxury spending remained strong post-lockdowns. While the Bulgari jewellery brand excelled in Asia, Tiffany which is reliant on the U.S. market saw weaker performance. LVMH pointed out that a significant portion of Chinese luxury purchases now take place in China and Japan, whereas, in the past, they often occurred in Europe.
- Alphabet, the parent company of Google, surpassed analysts' expectations by reporting second-quarter revenue of $US62 billion. This impressive performance led to a 5.8 percent increase in Alphabet's stock. Conversely, Microsoft experienced a 4.4 percent decline despite reporting stronger profits and revenue for the spring than anticipated by analysts. Meta Platforms reported an 11 percent increase in revenue for the second quarter compared to the previous year, reaching $US32 billion ($47 billion). The company's profits also saw a 16 percent rise, amounting to $US7.8 billion, driven partly by advancements in Meta's advertising technology utilizing artificial intelligence, along with other product enhancements. Notably, Meta Platforms' stock has more than doubled this year, while both Alphabet and Microsoft have seen significant gains, with both companies up by approximately 40 percent.
All information is sourced from: Bloomberg, Australian Bureau of Statistics, Australian Financial Review, Wall Street Journal, CommSec Market News, The Age, Market Watch, The Economist, Trading Economics, ABC Business.
