Qantas boss Alan Joyce apologised on Friday for "routinely letting customers down", and our readers had a lot to say about it. Check out how the day played out on our markets blog.
Disclaimer: this blog is not intended as investment advice.
Key events
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Live updates
And here's how we ended up at 4:30pm AEDT
By Emilia Terzon
- ASX 200: 7,558 points (+0.6pc)
- All Ords: 7,772 points (+0.6pc)
- Australian dollar: 70.68 US cents (-0.1pc)
- Dow Jones: 34,035 (-0.2pc)
- S&P 500: 4,176 (+1.4pc)
- Nasdaq: 12,184 (+3.1pc)
- FTSE: 7,761 (+0.8pc)
- Brent crude: $US82.04 a barrel (-1pc)
- Spot gold $1926.80 an ounce (-0.8pc)
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Bitcoin: $US23,826 (+1.2pc)
ASX 200 ends the week higher
By Emilia Terzon
And that's us for this week.
The ASX 200 has ended the day 0.6 per cent higher and 0.8 per cent higher overall. And that's despite ongoing talk about inflation, rates, recession and more. Optimism wins this week.
The top stocks on the ASX 200 were those funds we talked about earlier, Pinnacle and HMC.
Meanwhile, over on the All Ords, I noted that the top performing stock today was a company that my mother loves to order from: Marley Spoon. (I know Mum loves a shoutout!)
The company that delivers meal packs to cook at home soared by 38 per cent today. Bless it, that still only takes it to 22 cents.
See you next week.
Gas profits are 'unacceptable' but a solution isn't easy
By Emilia Terzon
You might have seen the news overnight that UK-listed gas giant Shell has doubled it's profits off the war in Ukraine.
Which mightn't sit well if you've looked at your energy bill lately.
So what's the solution?
Our business reporter and rotating host of The Business, Rachel Pupazzoni spoke to Grattan's Tony Wood about it today.
Here's some of his takeouts:
"I think the idea these companies can continue to make windfall profits on this extreme is unacceptable."
"Putting a simple price cap in place was never going to be the right answer."
"There is a middle ground here."
So what is this middle ground?
Watch Close of Business tonight on the ABC News Channel at 9.30pm AEDT tonight and several times over the weekend.
And here's an interview about Shell that aired today.
The 'parents' return as central banks meet again
By Michael Janda
Another, rather more lengthy, guest post from me. Skip ahead if you care not about interest rates or share markets (although, that makes me question why exactly you are reading this blog).
AMP's chief economist Shane Oliver generally does an interesting and entertaining end of week wrap on the markets and economics.
This week he's focused on the return of central bank meetings.
"After a nice six week break — where markets were sort of left on their own to interpret data and assess the outlook and in the process pushed shares up and bond yields down — central banks are back in action.
"It's a bit like the parents returning after the kids were home alone for six weeks – but so far so good with the Fed, Bank of England and the ECB all leaning less hawkish than they were late last year, albeit less so for the ECB."
Not sure how traders will react to being compared to teenagers... but his basic point is that markets have spent the past couple of months generally betting rate hikes would stop soon, and they look like they might be right.
"Coming after the Bank of Canada last week which signalled a pause in hiking, major central banks are getting less hawkish. This is all consistent with the easing in inflation pressures as indicated in our Pipeline Inflation Indicator for the US which is continuing to trend down pointing to further falls in US inflation ahead and with a lag in other countries too."
Australia's 'adults' at the RBA come back into the boardroom next Tuesday and, like their overseas counterparts, are expected to raise rates again.
But Shane Oliver doesn't buy into forecasts of the cash rate passing 4 per cent in Australia.
"With RBA rate hikes already getting traction — indicated by recessionary levels for consumer confidence, the collapse in housing indicators, signs that retail sales and the jobs market are starting to slow — and signs that global and local inflationary pressures are peaking our view remains that we are near the top in rates and taking the cash rate to 4.1% or more would be a policy mistake risking a major recession."
As for the share outlook? If rates really do peak soon, Dr Oliver thinks it could be quite good for 2023.
That would follow the saying, "as goes January for shares so goes the year", with both US and Australian shares up more than 6 per cent last month.
"Since 1980 a positive January in US shares has gone on to a positive year 84% of the time, although a negative January has only seen a negative year 39% of the time.
"It's similar for Australia where a positive January has gone on to a positive year 75% of the time but a negative January has only seen a negative year 37% of the time."
Before getting to a slightly disturbing analogy involving the tragic demise of his mother's hamster, Rabobank's global strategist Michael Every had a typically cynical view of the market's recent rally in his daily note.
"To summarise the recent market reaction function, if central banks are aggressively hiking, you push down long yields — loosening the effective monetary policy stance and juicing assets; if central banks are hiking less aggressively, you push down short and long yields — loosening the effective monetary policy stance and juicing assets; and if central banks suggest they are going to pivot, then you push down short and long yields — loosening the effective monetary policy stance and juicing assets.
"The common denominator through all of this is the market always pushes down bond yields to juice assets. That is because the market has a dyed-in-the-wool, bone-marrow-deep belief that inflation is going back to 2% or lower, everywhere, forever: anything and everything that says otherwise is permanently transitory."
Where stocks are sitting on ASX 200 at 3pm AEDT
By Emilia Terzon
We've still got those funds topping the list. Some are actually just regaining after losses yesterday.
It's a bad day to be a materials stock. It's the only one of the 11 indexes not doing well on the ASX 200 today.
We've got the index continuing to soar today. The index is currently up 0.6 per cent to 7,553 points.
What's got you going today?
Rate rise next week all but a done deal: ANZ
By Michael Janda
ANZ's economists, like most other forecasters, are expecting the Reserve Bank to raise interest rates next week.
It seems that, once again, the only question is really by how much.
"While a 25bp [basis point] hike next week is the most likely option, we expect the board to consider a 50bp hike, as it has done since it moved to 25bp hikes last October.
"Early signs of a slowdown in consumer spending (December retail sales and ANZ-observed spending data) and a softening in business conditions should be enough though for the RBA that demand is responding to higher rates, allowing it to stick to 25bp.
"It's worth noting that at the time of writing the market is almost fully pricing a 25bp hike next week, with close to a 50 per cent chance of a pause in March."
The latest market pricing shows traders expecting a peak cash rate around 3.75 per cent, which is 0.65 of a percentage point higher than the current 3.1 per cent.
If the market is right, someone with a $500,000 mortgage debt can expect their mortgage repayments to rise almost $200 a month from current levels.
They will wind up paying more than a thousand dollars a month more on their mortgage than they were at the start of May last year.
The rise is proportionate to the size of the mortgage, so if you've got a million-dollar debt then you can double those figures.
"For the average existing owner-occupier, this could see their mortgage rate climb to over 6 per cent and their monthly repayments rise by just under 40 per cent since the start of May," noted RateCity's Sally Tindall.
Qantas says it has improved. Lots of you disagree.
By Emilia Terzon
Flew Qantas in from London to Melbourne via Perth about a week ago and both me and my friend had damage to both our suitcases. The flight itself was an hour and a half late getting into Perth and we had to run to made our connection. We weren’t bothered too much by this as we are both young and shrugged it off but if we required extra assistance to get on and off the planes, we wouldn’t have made it. The cabin crew were incredible and super friendly with everything so it’s a shame that the company is being thrown under the bus for the shareholders. Corporations don’t provide goods or services anymore, they provide income for shareholders who wouldn’t otherwise work for it. Boeing is the cautionary tale in this whole debacle.
- Grace
4 days still waiting on our bags left behind at Wellington NZ tarmac Monday afternoon. No communication during flight or after flight that they left 30 peoples bags behind due to being overweight! Terrible communication. Such an inconvenience! Medications, toiletries clothes you name it! We have tears every night over missing teddies! Seems a bit greedy to be a full service airline and not have your bags make the flight!
- Gina
Yep, i was amongst the flight full of customers grounded in WA with luggage already checked in when he “had no choice” but to cancel all flights without notice. I missed my dad’s 80th birthday and will never fly Q again.
- Gus O
Refinancing surges on rising rates
By Michael Janda
Good afternoon, a short guest post from me.
While Aussies may not be taking on as many new home loans, people who already have mortgage debt are desperately searching for a better deal as interest rates surge.
As you can see in this chart, refinancing has never been more popular than over the past few months, even when fixed interest rates were at rock bottom levels a couple of years ago.
Analysis of the data by Canstar found that:
- A total of $19 billion in home loans switched to a new lender in December, which is up 18 per cent from the same time last year but did experience a small dip of 1.5 per cent from the record refinancing activity in November.
- Fixed loans still out of favour in December with just 4.9 per cent of new loans on a fixed rate, showing the majority of borrowers are opting to ride out the rate rises on variable rates.
While existing home owners scrambled to get a better variable interest rate, first home buyers were thin on the ground.
This isn't surprising, given that government handouts over the past few years such as the First Home Buyers Guarantee (that allows some low-deposit borrowers to avoid lenders mortgage insurance) and HomeBuilder, plus ultra-low interest rates, will have brought forward a lot of purchasing decisions.
The effect that stimulus can have on first home buyers entering the market can be seen in the last boom and bust, which came during the global financial crisis in 2008-09 when the Rudd government doubled, and for new builds tripled, first home buyer grants.
Keep it coming with your Qantas comments (and others?)
By Emilia Terzon
Another big corporate cutting costs to benefit shareholders! No more flying for us - caravan now on our time off. Beats the continual let downs of air travel !!
- Ben
I did enjoy this comment. One upside of the pandemic is lots of us have learned to cherish exploring our backyard.
Here's how we're looking at 12:15pm AEDT
By Emilia Terzon
- ASX 200: 7,538 points (+0.4c)
- All Ords: 7,753 points (+0.3pc)
- Australian dollar: 70.68
- US cents (-0.1pc)
- Dow Jones: 34,035 (-0.2pc)
- S&P 500: 4,176 (+1.4pc)
- Nasdaq: 12,184 (+3.1pc)
- FTSE: 7,761 (+0.8pc)
- Brent crude: $US82.04 a barrel (-1pc)
- Spot gold $1926.80 an ounce (-0.8pc)
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Bitcoin: $US23,826 (+1.2pc)
Home loan lending is continuing to drop as rates rise
By Emilia Terzon
And I thought I was done with property reporting for the week!
The latest ABS data has just come out and it shows the amount of money loaned out for property was down 4.3 per cent in December. That's a decline of $23b.
Overall, lending for home loans was down almost 30 per cent in 2022.
That'll be no surprise to those watching closely. We know the amount people can borrow is being rapidly slashed as interest rates rise at the fastest rate in decades.
And we know people are holding off borrowing right now as they mull whether property prices will drop even further. Sellers are also holding off listing right now, too.
Here's a TV story I had air this week on The Business on ABC.
And we're still getting more comments about Qantas
By Emilia Terzon
I have a love-hate relationship with QF. Love the cabin crews, airport crews and all the people generally involved with serving customers - they do a great job and should be proud of their efforts every day. The hate bit is more to do with the nameless and faceless execs (except old mate Joyce) that have progressively made decisions year after year to rip the core out of our most recognized global brand. Outsourcing, offshoring and anything else to cut costs at the behest of hitting profit targets. It's now coming home to roost. I just hope I'm not on one of the flights when the disaster egg hatches.
- Gazza
SHAME ON YOU QANTAS !!
- KAYE MCDONALD
The cost of loyalty to Qantas is too high, especially when travelling internationally. Other airlines are mostly cheaper, more reliable and provide a better onboard experience. Alan Joyce may keep the shareholders happy, but passengers less so.
- Frequent traveller
Is it just me or is our collective national past-time commenting on property and Qantas?
Here's the top movers and shakers at 11:30am AEDT
By Emilia Terzon
Never heard of those stocks at the top? They're ones that aren't usually so high up the list.
Today's gainers include two funds and assets managers, HMC Capital and Pinnacle Investment.
Meanwhile, you might have noticed the ASX 200 is continuing on it's rollicking journey this week. It's up 0.4 per cent currently.
How things are looking at 10:30am AEDT
By Emilia Terzon
- ASX 200: 7,502 points (-0.1pc)
- All Ords: 7,720 points (-0.1pc)
- Australian dollar: 70.74 US cents (-0.1pc)
- Dow Jones: 34,035 (-0.2pc)
- S&P 500: 4,176 (+1.4pc)
- Nasdaq: 12,184 (+3.1pc)
- FTSE: 7,761 (+0.8pc)
- Brent crude: $US82.04 a barrel (-1pc)
- Spot gold $1926.80 an ounce (-0.8pc)
- Bitcoin: $US23,826 (+1.2pc)
Seems that Qantas still has some grovelling to do?
By Emilia Terzon
I am not sure how I feel about flying qantas, being in Perth we have less choice especially internationally. We recently returned from an overseas trip and had 30 hr delay in singapore at the hands of Qantas. I suspect once it's delayed the stats don't take in to consideration the length of delay. I feel they are totally stretched and have no spare capacity which I suspect is partly planned so they can demand higher fares. It means that there are no spare crews / aircraft when things go wrong especially in foreign ports. I don't think Qantas or Virgin have performed very well when you compare to overseas airlines. Australia needs more competition.
- RG
It'd be amusing if it weren't such a bad joke. He would apologize for the Kennedy assassination if it kept the board happy
- Frequent Flyer
And yet after years if poor performance he continues to retain his position whilst his workforce has been gutted.
- Paul Cleary
Qantas CEO says airline was 'routinely letting customers down'
By Emilia Terzon
Alan Joyce has penned a letter to Qantas customers about the Australian airline's heavily scrutinised performance last year.
Here's some of it:
Six months ago, a lot of people felt we’d let them down and the figures showed why.
Almost half our flights were late, our rate of misplaced bags had more than doubled and we were cancelling up to 7 per cent of our schedule.
Perception wise, it didn’t help that this came after some controversial restructuring decisions to make sure we survived COVID.
And it didn’t matter that airlines around the world had the same problems as travel restarted. If your flight to the Gold Coast just got cancelled, it doesn’t make you feel any better if the delays are worse in Amsterdam.
Knowing that we were routinely letting customers down was hugely disappointing for everyone at Qantas. It’s the exact opposite of our culture.
Last August, we apologised and promised to fix it. And almost every week after that, things improved. It’s a huge credit to our people that the data now shows Qantas is back to its best.
The data Qantas has put out at the same time claims it was back to pre-COVID levels of performance in December and January.
More than 78 per cent of planes were on time, and there were fewer cancelled flights, Qantas data shows.
It comes after Qantas received heat in the media last year for cancelled flights, losing bags, and even recently scrutiny after a series of turned back Boeing flights and one failed engine!
Alan Joyce is rebutting the turnbacks were an issue.
These have received a huge amount of attention because we had several in quick succession, but despite the hype, they are actually a symptom of strong safety systems.
Globally, the industry sees well over 10,000 air returns a year. Looking at our data, there’s no change from our average rate of turn backs before and after COVID, which for Qantas is around 60 a year or 1 per 2,000 flights.
How are you feeling about flying Qantas?
How things are looking at 8am AEDT
By Emilia Terzon
- Australian dollar: 70.83 US cents (-0.8pc)
- ASX 200 futures: 7,464 (up 0.2pc)
- Dow Jones: 34,035 (-0.2pc)
- S&P 500: 4,176 (+1.4pc)
- Nasdaq: 12,184 (+3.1pc)
- FTSE: 7,761 (+0.8pc)
- Brent crude: $US82.04 a barrel (-1pc)
- Spot gold $1926.80 an ounce (-0.8pc)
- Bitcoin: $US23,826 (+1.2pc)
ASX set to rise as European markets raise interest rates
By Emilia Terzon
Good morning! Emilia from the ABC business team here.
I've just come off a week reporting on the rolling extravaganza that is the Australian property market, and so I have interest rates on my mind.
It appears central banks still do too.
The Bank of England and the European Central Bank have both just raised their cash rates by 0.5 per cent. That's after the US Federal Reserve also hiked interest rates again on Wednesday.
European shares have risen off this decision, we presume because markets are reading into the dropping of words like "forcefully" off the language guidance by the central banks.
Meanwhile, the Dow dropped overnight, but the tech index in the US has bounced up. Facebook's owner Meta is behind that with its stock soaring 25 per cent. Let you know why soon.
With all of this happening, it's probably no surprise that our own ASX is tipped to make gains today. It also started off strong yesterday then lost its steam. Who knows what it'll do today?
