The Australian share market has rallied to its highest level since early December, bolstered by higher commodity prices after US consumer prices fell for the first time since May 2020.
Look back on the day's financial news and insights from our specialist business reporters.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Markets snapshot at 4:20pm AEDT
By Sue Lannin
ASX 200: 7,328 up 0.7 per cent
All Ordinaries: 7,540 up 0.7 per cent
Australian dollar: 69.52 US cents down 0.3 per cent
Hang Seng: 21,571 up 0.2 per cent
Shanghai Composite: 3,183 up 0.6 per cent
Nikkei 225: 26,158 down 1.1 per cent
Dow Jones: 34,190 up 0.6 per cent
S&P 500: 3,983 up 0.3 per cent
Nasdaq Composite: 11,001 up 0.6 per cent
FTSE 100: 7,794 up 0.9 per cent
DAX: 15,058 up 0.7 per cent
CAC 40: 5,237 up 0.8 per cent
Brent crude: $US83.63 down 0.5 per cent
Spot gold: $US1895 an ounce down 0.1 per cent
Iron ore: $US123.05 up 0.9 per cent
Bitcoin: $US18,826 steady
ASX 200 top movers
By Sue Lannin
Energy stocks drove the gains on the Australian stock market as oil prices rose on signs that the cost of living in the US is moderating and on the reopening of China from COVID restrictions.
Vitamins company Blackmores (+6.2 per cent) was the best performer on the ASX 200, while biotech Imugene (-5.9 per cent) did the worst.
ASX climbs to six week high on US inflation data
By Sue Lannin
The Australian share market rallied for the third day in a row after US inflation fell in December.
Investors are hoping that means that price rises have peaked in North America prompting the US Federal Reserve to moderate future interest rate hikes.
The inflation news saw the US dollar fall which boosted oil and gold prices, in turn bolstering miners and energy stocks.
The market rose more than 1 per cent at its peak driven by oil and gas firms, banks and miners on optimism that a US recession could be averted if the Fed dials back its rate increases.
Investors have also been cheered by China ending COVID-19 restrictions.
The ASX 200 index gained 0.7 per cent to 7,328, marking its highest close since early December.
The All Ordinaries index put on 0.7 per cent to 7,540 with nearly all sectors higher.
Big miner BHP (+0.5 per cent) rose to nearly $50 for the first time and closed at a record high of $49.64 cents, while energy firm Santos climbed 2.4 per cent.
App firm Life360 (+11.1 per cent) jumped after announcing it would sack 14 per cent of its workforce to cut costs.
All the big banks increased with National Australia Bank doing the best (+1.6 per cent).
Vitamins firm Blackmores (+6.2 per cent) was the best performer on the ASX 200, while biotech Imugene (-5.9 per cent) was the worst performer.
China exports and imports tumble in December
By Sue Lannin
Surging COVID-19 infections saw China's exports and imports plunge in December as global demand cooled.
Reuters reports Chinese exports contracted by 9.9 per cent from a year earlier, the worst fall since February 2020 during pandemic lockdowns.
Iron ore imports dropped by 8.1 per cent in December from November with the surge in COVID cases likely delaying unloading of cargo.
Imports fell by 7.5 per cent in December from a year earlier, better than the 10.6 per cent decline in November.
However, despite the sharp fall in shipments, total exports rose 7 per cent in 2022 because of China's strong trade with south east Asia.
Lending for new homes reaches decade low
By Sue Lannin
Despite the record amount of home loans being refinanced in November as people seek out better mortgage deals, the Housing Industry Association says lending for the construction or purchase of new homes has fallen to the lowest level since June 2013.
HIA economist Tom Devitt says there were only 5,057 loans for the construction or purchase of new homes over November amid higher borrowing costs.
"Investors and owner occupiers alike are retreating from the market," he said.
"The contraction in lending occurred before the RBA increased the cash rate in December and we expect an ongoing decline in lending as the full impact of the increase in interest rates flows through to households."
"The RBA has already undertaken the steepest hiking cycle in a generation, and it needs to hold fire on further hikes to give their actions to date time to play out."
The Commonwealth Bank expects home prices to fall around one fifth from peak to trough because of the steepest interest rate tightening cycle on record by the Reserve Bank.
The RBA has increased official rates by 3 percentage points to 3.1 per cent since May last year.
CBA economist Stephen Wu says a large share of fixed rate mortgages are due to roll off over the first half of 2023.
"Both variable and fixed rates for new loans have increased substantially since their pandemic lows. "
"Unlike variable rate borrowers who have seen incremental increases to their monthly repayments, fixed rate borrowers will see large step changes in their payments as their fixed rate terms expire."
Read more on the so-called fixed rate mortgage cliff here.
Home loan approvals slump as rate rises bite
By Sue Lannin
HSBC says the 24 per cent plunge in home loan approvals over the year to November is the fastest decline since the global financial crisis back in 2008.
Already home prices have fallen by more than 8 per cent from their peak in May last year amid the Reserve Bank's rapid interest rate hikes.
HSBC chief economist Paul Bloxham is predicting prices could fall further.
| "We see national housing prices falling by 16% from peak-to-trough, but this assumes the RBA pauses soon," he said. " More hikes could mean further declines." |
|---|
| "Our view is that as soon as the RBA sees signs the jobs market is loosening, it will choose to pause." "Plummeting housing prices and a rising unemployment rate would be risky combination." HSBC says mortgage rates rose in December to 5.97 per cent for a discounted variable rate mortgage, and to 6.24 per cent for an owner occupier three year fixed rate mortgage. |
|---|
Cheapest and most expensive places to rent
By Sue Lannin
The cost of keeping a roof over your head has soared for renters over the past year amid a housing shortage.
This week we heard that the cost of renting jumped by 10 per cent across the country last year.
Here ABC News takes a look at the most affordable and most expensive suburbs to rent.
Peru's central bank raises rates to 7.75 per cent
By Sue Lannin
Reuters reports that Peru's central bank has raised its benchmark interest rate by 0.25 per cent to 7.75 per cent amid the highest inflation in a quarter of a century.
Annual inflation is running at 8.46 per cent, the highest level in 26 years.
Peru's central bank has raised rates steeply since July last year.
"The significant rise in international energy and food prices since the second half of 2021, accentuated by international conflicts, had led to a sharp increase in global inflation rates in a scale not seen in many years," the central bank said in a statement.
The country is also facing a political crisis which has left dozens of people dead after former president Pedro Castillo was ousted for trying to dissolve Congress.
Here's more on the situation in Peru.
Argentina's inflation rate at 95 per cent
By Sue Lannin
While many Australians are struggling with the high cost of living, spare a thought for Argentinians.
They are battling an inflation rate of 95 per cent, the highest level since 1991 with prices almost doubling from a year ago.
Official data shows that consumer prices jumped 5.1 per cent over December, and over the year they surged by 94.8 per cent.
Argentina is battling one of the highest inflation rates in the world amid an economic slump and a shortage of US dollars.
Reuters
Bank of Korea raises interest rates to 14 year high
By Sue Lannin
South Korea's central bank has raised its official interest rate by 0.25 per cent to 3.5 per cent, the highest since 2008.
The move was expected by economists who think the decision could mark the end of the Bank of Korea's monetary policy tightening.
It is the bank's tenth rate rise since it began increasing borrowing costs in August 2021.
Annual consumer inflation in South Korea hit a 24 year high of 6.3 per cent in July last year, and the current rate of 5 per cent is more than twice the bank's target of 2 per cent over the medium term.
Reuters
ASX 200 top movers at lunchtime
By Sue Lannin
Here are the top movers on the ASX 200 over lunchtime. Nearly all sectors are higher with energy stocks leading the gains, followed by consumer staples, banks and tech firms.
140 stocks are higher, 5 are steady and 55 are lower over lunchtime.
Australian shares surge to five week high
By Sue Lannin
The Australian share market has added around 1 per cent to its value today as investors hope that weaker US inflation will persuade the US central bank to slow down the pace of its interest rate rises.
The ASX 200 index rose 1.1 per cent to 7,358 after midday with nearly all sectors higher.
Gold miners gained after an increase in the price of the precious metal to an eight month high, as did energy stocks after oil prices climbed again overnight thanks to the fall in US inflation in December.
Oil and gas producer Santos put on 3.7 per cent.
And global miner BHP (+0.8 per cent) neared $50 a share for the first time.
Big banks also drove the gains with the Commonwealth Bank (+1.6 per cent) doing the best.
Family location sharing app firm Life36 (+9.6 per cent) jumped as it predicted upbeat earnings for 2023 on strong subscription revenue.
It also announced it would lay-off 14 per cent of its workforce.
Coal miner New Hope (+5.3 per cent) did the best in the ASX 200, while lithium miner Core Lithium (-2.9 per cent) did the worst.
Home loan refinancing at record high
By Sue Lannin
As mortgage interest rates rose in Australia last year, a record number of borrowers switched lenders in November according to the Bureau of Statistics.
The value of owner-occupier refinancing increased 9.1 per cent to a new high of $13.4 billion, seasonally adjusted in November.
That's as the overall value of home loans approved over the month continued to fall from the record highs seen earlier in 2022.
The total value of new home loans fell 3.7 per cent seasonally adjusted from October to November to $24.7 billion.
Mortgage approvals fell by nearly one quarter over the year.
ABS acting head of finance and wealth, Dane Mead says refinancing peaked as borrowers looked for a cheaper deal.
"More borrowers switched lenders for lower interest rates as the RBA's cash rate target continued to rise," Mr Mead said.
"The number of owner-occupier dwelling commitments also continued to fall in November to below the pre-pandemic level for the first time."
Loans taken out by first home buyers dropped 5.5 per cent over the month, and are down by half from their January 2021 peak.
US regulator charges crypto lenders over unregistered security sales
By Sue Lannin
More crypto currency firms are facing legal action as regulators crack down on the shenanigans in the industry.
Reuters reports that the US Securities and Exchange Commission charged Genesis Global Capital and Gemini Trust Company with illegally sellling securities to hundreds of thousands of investors through their crypto lending program.
The SEC alleges that Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest.
They raised billions of dollars worth of crypto assets from investors, but in November 2022, Genesis told investors they could not withdraw their assets because of a liquidity crunch caused by volatility in crypto markets.
Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors, but they still have not been able to withdraw their money according to the SEC.
The SEC accuses the firms of violating securities laws through the offer and sale of crypto assets through their Gemini Earn Lending product.
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," said SEC chair Gary Gensler.
"Today's actions build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. "
"It's not optional. It's the law."
Gemini co-founder and chief executive Tyler Winklevoss called the complaint disappointing and said the company looks forward to defending itself against what he called "this manufactured parking ticket."
ASX 200 movers and shakers
By Sue Lannin
Here are the top movers on the ASX 200 index in early trade.
ASX gains after US inflation cools in December
By Sue Lannin
The Australian share market has opened higher after Wall Street rose on those signs that inflation is weakening in North America.
The new economic data has raised expectations that the US Federal Reserve could downsize future interest rate rises, which risk tipping the US economy into recession.
The Fed raised rates from near zero in early 2022 to 4.25 per cent to 4.5 per cent by December.
The ASX 200 index is up 0.7 per cent to 7, 329.
Most sectors are higher with energy leading the way, because of a rise in oil prices overnight on the weaker US inflation and a fall in the greenback.
Miners and banks are also driving the market.
Coal miner New Hope (+4 per cent) is the best performer, while biotech Imugene (-1.5 per cent) is doing the worst.
CommSec says the ASX 200 is around 4 per cent off its record high of 7,633 in August 2021, and mining stocks are leading the way as China reopens.
Treasurer Jim Chalmers on the $5 billion cost of the floods
By Sue Lannin
And here is Treasurer Jim Chalmers talking to RN Breakfast about the $5 billion in damage caused by last year's devastating floods across the country.
He also warned that billions more may need to spent in 2023 on natural disasters.
"We've put that number out there really just as a reminder that even though we are rightly focused on the human cost of these natural disasters, which are becoming more and more frequent, there is a cost to the economy as well and a cost to the budget," he said.
Natural disasters cost Australia $5 billion in 2022
By Sue Lannin
New government estimates show that natural disasters, mainly wet weather and floods, cost the economy $5 billion last year or 0.25 per cent of gross domestic product (GDP).
Treasurer Jim Chalmers told RN Breakfast that billions more will need to be spent this year to mitigate natural disasters.
And the majority of Australians lived in a local government area that was affected by serious natural disasters - mostly floods - in 2022.
Global reinsurer Munich Re estimates last year's floods in northern New South Wales was the fourth most expensive global disaster in 2022.
Treasury says the disasters worsened inflation with destroyed crops and disrupted supply chains driving up the cost of fruit and vegetables.
More from my colleague Georgia Hitch.
S&P 500 movers
By Sue Lannin
It was a volatile trading session for the S&P 500, but more sectors rose than fell. Energy, real estate and technology stocks did the best, while utilities, discretionary consumer firms, and healthcare stocks were the laggards.
Struggling borrowers miss out on cheaper mortgage rates
By Sue Lannin
Hundreds of thousands of the most vulnerable mortgage borrowers risk being locked into uncompetitive interest rates as falling property values reduce or remove their ability to refinance.
That's because most lenders offer their cheapest mortgage rates to new customers who have a deposit or equity of more than 20 per cent according to financial comparison firm RateCity.
More from my colleague Michael Janda on how people becoming "mortgage prisoners" will be a big issue in 2023.
