Welcome to the end of another week. Let’s forget commodities, stocks, and war for a moment, and look at inflation trajectories.
Next month, the RBA will make a fresh interest rate decision, and if the US Fed and Bank of England (BoE) are anything to go by, it’s looking like we too might keep rates on hold.
That’s because the whole world is still waiting to see what Trump’s tariff regime means for US inflation. There’s also a new upside risk to US CPI and PPI – crude oil prices have crossed back over the US$70/bbl mark as the Iran-Israel conflict enters its second week.
Should that remain the case, Australians can expect the price of fuel to start looking at lot like climbing above A$2.00/L again.
Still, the US Fed expects to make more rate cuts later this year, and we all know whatever America does tends to lend the groundwork for others to follow. According to some analysts, CYQ3 will get ‘more interesting.’
(Apparently, we’re going to find out soon from Trump who he picks to replace Powell as Fed Chair next year. One to watch.)
So what about Australia?
Looking at the ASX, there were two big standout items this week: first, ADNOC’s $30B+ takeover bid for Santos Limited, and second, the ASIC-led inquiry into the Australian Securities Exchange (ASX) itself.
The ADNOC-Santos story is well known at this point, and it ultimately feels like the deal mightn’t cross the line.
At a time where energy security and domestic energy supply capacity are hot – especially seeing as the eastern states of Australia face a gas shortage crisis in some areas – it feels like it mightn’t be the right time for a UAE state-owned oil supermajor to snatch Australia’s second largest energy player.
It also feels unharmonious with the fact that Canberra is currently seeking to buy back the Port of Darwin from Chinese owners.
Then there’s ASIC’s inquiry into the ASX – this time, to try and figure out for good what exactly is happening behind closed doors at the local bourse and why we can’t make our CHESS upgrade work.
Still, Morgan Stanley sees good things in the year ahead – and if the performance of VBX Limited is anything to go by looking at its debut, punters are showing an appetite for fresh listings.
And the other elephant in the room
And I’d be remiss not to touch briefly on the Iran-Israel situation, which is serving to become the next big war thematic. Defence stocks at home and abroad have already been enjoying upside.
The big question is whether or not the US will see its troops put boots on the ground in Iran, and as for the likelihood of that, we’re waiting for Donald Trump to make up his mind.
So far, he’s been teasing the idea, perhaps to get a sense of what the public thinks. While Wall Street’s had some red days, markets have generally reacted less fearfully than they did when Russia invaded Ukraine back in the early 2020’s.
It looks like war fatigue may be here to stay.
Until next week! Here’s what else caught my eye listed below in Week 25:
Australian Equities
Santos receives $30B bid from UAE’s state-owned ADNOC but likelihood unclear
Morningstar says Virgin’s IPO is overpriced
ASX Ltd says it’s aware that traders have lost trust in system as ASIC launches review
E&P slaps a $28.36/sh price target on NextDC on same day it locks in $2.2B debt facility
Australian Economy
Morgan Stanley relatively optimistic on ASX performance ahead, obvious risks remain
Chalmers tells Press Club tax reform will be needed to sustain budget – policies unclear
Australian unemployment stays flat at 4.1%, so far dodging US-style tremors
International Economies
Chinese retail sales hit 2Y high on subsidy boost but commercial property remains weak
Bank of England also keeps rates on hold
Commodities
Uranium stays fashionable as Sprott flags move raise US$10M; boost purchasing
Brent Crude retains upside volatility strength heading into Week 25
Iron ore dips to US$92/tn as Chinese steel output curbs roll on in effort to address oversupply
Geopolitics
Trump stays Mum on whether or not the US will get involved in the Iran-Israel war
Australian embassy evacuates members out of Iran as Israel-Iran war rages
Reuters reports the US is lobbying Vietnam to get away from Chinese tech
Odds & Ends
Amazon looking to Australia as part of data centre network expansion
IVF industry the subject of review looking into potential need for more red tape
Join the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.