Week 31 Wrap: Oz core CPI @ 2.7%! But here come tariffs. Again. Next Friday


Once again, I am forced to write about tariffs. Nearly against my will, but if I don’t, no-one is going to click this article. Beware the ides of March, and April, through to August.

While the ASX got a slight boost this week as the ABS showed Aussie headline inflation at a happy-looking-number of 2.1% (while core or TMI sits at 2.7%); it is the spectre of the Great Trump Tariff Un-Pause that has sunk us into the red.

Naturally, they were meant to go live on Friday – but now they kick off on August 7. Sweet relief.

Our bourse isn’t alone; essentially the whole world is waiting to see what happens. Australia, at least – as far as reports around lunchtime AEST are anything to go by – is meant to be copping a tariff rate no higher than 10%.

And if that’s the case, the XJO is likely to plod along. We’ve seen something of a rotation out of banks (read: CBA) into miners (read: BHP), but so far, that hasn’t been too drastic.

ASX200 still pretty decent

And for all the world’s uncertainty, the ASX200 has still returned +6.2% YTD.

The ASX200 1Y chart shows we’re a resilient bunch. (MarketIndex)

So that’s good.

But Trump has recently turned his attention back to Gaza, even writing on his love-it-or-hate-it Twitter knockoff Truth Social that the fact Canada has moved to recognise a Palestinian state now makes it hard for the US to do a deal with Canada.

For the next 7 days at least, that could become a new flavour on the commentator’s plate: what Australia’s geopolitical positioning means for its relationship with the US.

(So far, Trump hasn’t appeared to care too much about Albo and Xi getting friendly. At least not what we know publicly.)

Uncertainty, uncertainty, uncertainty

So, as ever (or at least since Feb), we’re at the whim of a man whose fondness for uncertainty is only matched by the speed at which he clearly becomes bored. Food for thought.

Long story short, next week should be interesting, but I doubt it will be too apocalyptic. After all, plenty like to argue the tariff burdens are already weighed in.

Ex-Trump, Australia is of course keen for a rate cut in August.

But UBS has reiterated it sees Oz inflation climbing as high as 5% over the next twelve months – with RBA cuts pushing up house prices being a contrarian catalyst for that – and Aussie inflation expectations have been rising (at least among the types of people who participate in economic surveys.)

As I wrote earlier this week, I’m pretty confident the chances of an RBA rate cut are closer to 50/50 than what ever-optimistic prediction markets are expecting. I hope to be wrong! But I’m just not seeing an ice cool jug of Kool Aid yet.

Anyway. Global tariffs.

Trump’s idle fascination with trade taxes will likely remain the vogue topic next week, depending on how Wall Street behaves this evening and early next week.

Still, I imagine tariff fatigue will still prevail above all else. Just look at Wall Street’s YTD performance.

As of Friday arvo Australian time, here’s US market futures for tonight’s session:

US Market Futures as at 1.15pm AWST Friday 1 Aug (CNN Business)

Here’s what else caught my eye this week:

Australian Economy

Aussie core CPI dips to 2.7% in a sign widely interpreted to solidify an August cut

Looking past tariff-related impacts; Aussie consumer confidence rangebound last 10mths

UBS says it’s still expecting a 5% inflation read by 2HCY26 due to house price increases

Oz workers job-hopping less than previous decades, even in strong market

Canberra-backed report declares renewables cheapest energy option as battery storage scales

Australian Equities

Greatland Resources tumbles below recent float price on back of quarterly on Tues

Shorters vindicated as analysts cut Boss Energy after Monday slaughter

International Economies

Report from climate research centre suggests China could have hit ‘peak emissions’

International Equities

Morgan Stanley reiterate bullish call for S&P500 hitting 7,200pts by EOY

Samsung to produce microchips for Tesla at US manufacturing plant in US$16.5B deal

Commodities

Commonwealth reckons iron ore has a US$100/tn psychological level

Geopolitics

American and Chinese officials holding trade talks ahead of possible Trump-Xi meet

Federal Trade Minister says Australia still expecting 10% tariffs on Tuesday

Regulatory, Odds & Ends

Australian student debts to be cut by average of $5.5K each under new laws

UN points to H2 potential in Oz as ACCC carries on ‘renewable gas’ greenwashing lawsuit

Like Japan, the EU must invest near-trillion dollar sums into US to keep Trump happy

The ABS is ditching its retail spending survey as household spending series takes over

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