The Australian share market struggled for direction, but ultimately ended its day flat, in the absence of a strong overnight lead from Wall Street, where markets are closed for a public holiday.
In other news, China released some key economic data, showing that its economy grew 3 per cent last year.
While it exceeded the market's very low expectations, it was China's second-lowest rate of GDP growth in 50 years.
Not to mention, its population shrank by 850,000 in one year — the first decrease since 1961.
See how the trading day unfolded with our blog.
Disclaimer: this blog is not intended as investment advice.
Live updates
Lacklustre end to the Australian trading day
By David Chau
The Australian share market spent most of its day in the red.
In the end, the ASX 200 finished trading with a 0.03% loss (practically flat), and closed at 7,386 points — just below yeterday's nine-month high.
The broader All Ords index fell 0.1% to 7,598 points.
Many of today's best performing stocks were retailers like IGA's owner Metcash (+2.7%), Woolworths (+2.5%), Coles (+2%) and liquor brand owner Endeavour Group (+2%).
Stocks in the real estate sector also did well, like PEXA (+2.3%), Charter Hall (+2%) and Goodman Group (+1.9%).
At the other end of the spectrum, today's weakest performers were gold stocks like Capricorn Metals (-5.6%), Regis Resources (-4.8%) and Gold Road Resources (-4.4%) as gold prices fell from a nine-month high.
Other stocks which suffered big losses include Core Lithium (-4.2%), Imugene (-5.9%) and Bapcor (-4.6%).
How are overseas markets looking?
By David Chau
It's a mixed bag for stock markets in the Asia-Pacific, with solid gains for New Zealand's NZX 50 (+0.6%) and Japan's Nikkei (+1.2%).
However, it's looking more downbeat for Hong Kong's Hang Seng index (-1.2%), the Shanghai Composite (-0.4%) and South Korea's KOSPI (-1%).
It looks like Wall Street will start the day lower as traders return to work after the Martin Luther King Jr public holiday.
Futures tied to the main US indexes are down slightly.
Major investment banks Goldman Sachs and Morgan Stanley will report their quarterly results.
Investors will no doubt be interested in how much cash these banks are stockpiling for a rainy day (in case there's an uptick in borrowers defaulting on their loans), and whether they're forecasting a recession for America this year.
The Australian dollar has recovered to 69.7 US cents (up 0.1%).
On oil markets, Brent crude futures are trading at $US84.71 a barrel (up 0.3%).
Spot gold is worth $US1,910 an ounce (down 0.4%).
Are China's GDP figures reliable?
By David Chau
The short answer is "not 100 per cent".
They should definitely be taken with a grain of salt. But don't take my word for it!
Even China's Premier Li Keqiang has problems trusting his nation's official economic figures, according to a classified US document released by Wikileaks.
According to that classified document:
"Mr Li reportedly told a US diplomat that 'GDP figures are 'man-made' and therefore unreliable'.
"All other figures, especially GDP statistics, are 'for reference only', he said smiling."
Professor James Laurenceson (an Australian-China relations expert at the University of Technology Sydney) said China's economic figures do paint an accurate picture overall:
"The prosperity of China is real, along with its demand for goods from Australian farmers and miners, who aren't making up that demand."
"I don't doubt the degree of accuracy in general terms, but the figures within a 1-2 per cent margin might be a little rubbery."
For more on this, you can read my analysis here.
Why asking markets for advice is like asking a toddler what they want for dinner
By Michael Janda
Good afternoon, a little guest post from me on a highly entertaining research note that dropped into my inbox this arvo.
Rabobank global strategist Michael Every is one of the world's more colourful market analysts.
In today's missive, he warns about the conflicts of interest inherent in so much investment and economic advice that gets dished out:
"Talk to anyone on the equity side: isn't it always time to buy equities? Because if not, there is less need for equity people. As a result, isn't the 'wisdom of that crowd' biased?
"Talk to anyone on the gold or crypto side: isn't it always time to buy gold or crypto? Because if not, there is less need for gold and crypto people. (And indeed there are now many fewer crypto people.) As a result, isn't the 'wisdom of that crowd' biased?
"Talk to anyone on the traditionally staid bond side: isn't it always shortly time to buy bonds too? Because higher yields destroy a financialised, highly indebted economy, what goes up must always come down. Because if not, there is less need for bond people telling you that. As a result, isn't the 'wisdom of that crowd' biased?
"Talk to anyone in economics: doesn't inflation always return to the central bank target of 2%? That's the thought process as well as the function of their DSGE models. Because while this may not mean less need for economics people, it does mean more need for a different kind of economist — one who understands political economy, or logistics, etc. Indeed, saying inflation doesn't come down means admitting the whole economic paradigm has changed. And what do you do when you only have a hammer and a screw, or a rawl plug, not a nail? As a result, isn't the 'wisdom of that crowd' biased?"
He then compares this "biased" advice to a three-year-old's dinner requests:
"In short, asking markets about the inflation and rates outlook, when so few in markets are truly neutral, is like asking very small children what they think is going to be for dinner: it's always going to be chocolate and fries. That's what they actually think, because that's what they want it to be.
"So, is it worth listening to 'the wisdom of crowds'? Yes, because you get trampled if not. And no, because no matter how much you want chocolate and fries for dinner when you are 3, the odds of your parent putting that on the table every day are fairly low."
Every concludes by giving his own thoughts about what to expect this year:
"So, what's for dinner tonight? Volatility. It's just still in the oven."
It also tends to come out piping hot, burning a few fingers along the way. Not to mention catching a few investors with their pants down.
China data on COVID-19 impact is 'implausible'
By David Chau
Taking a look back at China's latest GDP figures, there are so many ways to slice and dice them.
China's economy grew by 3% last year. That's the nation's second-worst annual growth rate since the 1970s (when its economy opened up and embraced free markets).
Another way to look at China's economy, is its GDP growth between the September and December quarters.
During those three months, its GDP growth was 0% (dead flat). Not everyone is convinced about the accuracy of those Chinese figures.
"That is implausible, even accounting for December data showing surprising economic resilience in the face of the reopening wave of infections," according to Julian Evans-Pritchard, who works at Capital Economics as its China economist.
"Nevertheless, it’s clear that things are looking up for the Chinese economy, with more timely data pointing to a strong pick-up at the start of 2023," he wrote in a note to clients.
"The breakdown of the GDP data shows that services continued to fare worst last quarter, with growth of just 2.3% y/y [year on year].
"Increasingly widespread lockdowns and movement restrictions weighed heavily on services activity in October and November.
"And although these had mostly been dropped by December, this was then replaced by soaring infections, which kept many workers and consumers at home."
Australian market drops (once again)
By David Chau
It's been a choppy day of trade, with the market struggling for direction.
After briefly rising at midday, the ASX 200 is down again, with a 0.2% loss in the late afternoon.
China's population shrinks for first time in 62 years
By David Chau
China's population fell last year for the first time since 1961, a historic turn that is expected to mark the start of a long period of population decline.
The country had 1.41175 billion people at at the end of 2022, compared with 1.41260 billion a year earlier, China's National Bureau of Statistics said.
Simply put, China's population dropped by 850,000 people in just one year.
China's GDP growth slows to 2.9% in December quarter
By David Chau
China has reported one of its slowest periods of economic growth on record, underlining the toll exacted by a stringent "zero-COVID" policy:
- According to new data from the National Bureau of Statistics, China's GDP grew by 2.9% in the December quarter (compared to the same period 12 months ago).
- While it beat the market's ultra-low expectations (of a 1.8% rise), it was one of China's weakest growth rates on record.
- It was also significant slodown, given its economy grew 3.9% in the year leading up to the September quarter
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In the 2022 calendar year, China's economic growth was 3% — far below the government's official target of around 5.5%.
China's economy struggled over 2022, with major industrial centres including Shanghai and the Yangtze River Delta area as well as Guangzhou locked down or put under curbs for long periods as part of the government's "zero-COVID" strategy.
That stringent anti-virus policy was abruptly lifted last month, and economists expect growth to rebound this year although rocketing COVID infections could temper the revival in the near term.
Beijing has pledged more support for the economy as external demand falters amid global recession risks.
Miners weigh on ASX amid China COVID-19 worries
By David Chau
The local share market has recovered slightly in midday trade.
However, they are still being weighed down by mining stocks after China reported a sharp rise in COVID-related deaths since abandoning its zero-COVID policy last month.
The ASX 200 index was practically flat. It had gained 0.1 per cent to 7,393 points, by 12:10pm AEDT, after a four-session winning streak.
Mining companies BHP and Fortescue dropped 1.7% and 3%, respectively.
Rio Tinto fell 1.1% after the miner hinted that China's reopening from COVID restrictions was set to raise near-term risks of labour and supply chain shortages.
However, electronics retailer JB Hi-Fi gained 3.6% and was the top gainer on the index.
Origin Energy dropped 2.1% as the power producer extended its exclusivity period for the Brookfield-led consortium to finalise its $15.5 billion buyout bid.
Confidence improves for consumers as RBA pauses rate hike cycle
By David Chau
Consumer confidence rose in January (for the second straight month), as a break in the painful cycle of interest rate rises likely provided temporary relief for borrowers.
Sentiment rose by 5% in January, the largest monthly gain since April 2021, according to the closely-watched Westpac-Melbourne Institute index.
However, the index reading of 84.3 points still means sentiment is stuck near its lows of 2020 (when COVID-19 first struck).
Any reading below 100 points means the pessimists outweigh the optimists.
Westpac chief economist Bill Evans said one likely explanation for the lift in confidence is that January is the first month that did not see an interest rate hike by the Reserve Bank since April.
"While that was because there was no RBA Board meeting in the month rather than an explicit decision by the Bank to leave rates unchanged, the break in the tightening cycle looks to have provided some relief," he said.
"If so, we should be cautious about reading the January sentiment rise as part of a continuing trend."
The RBA has raised rates by a whopping 300 basis points to a decade-high of 3.1% since May (when they were at a record low of 0.1%).
Miners suffer heavy falls
By David Chau
Now here are the worst performers on Australia's benchmark stock index.
Most of them are coal, copper, iron ore, and gold miners, like Whitehaven Coal (-4.2%), Sandfire Resources (-4.1%), South32 (-2.8%), Champion Iron (-2.9%) and Gold Road Resources (-2.7%).
JB Hi-Fi and healthcare stocks outperform
By David Chau
Here are the best performing stocks on the ASX 200 this morning.
JB Hi-Fi is topping the list, with its share price jumping 3.3%.
The retailer said its half-year sales rose 8.6% to $5.3 billion.
It also reported a 14 per cent surge in EBIT (earnings before interest and tax) to $479.2 million.
“We are pleased to report record sales and earnings for HY23 as trading conditions started to normalise following two years of Covid related disruptions," said JB Hi-Fi chief executive Terry Smart.
Healthcare is the best performing sector, led by Fisher & Paykel Healthcare (+1.7%) and CSL (+1.6%).
Australian market drops from nine-month high
By David Chau
The local share market has opened slightly lower.
It's being weighed down by miners as reports of increased COVID-19 cases in top steel producer China revived demand concerns.
The ASX 200 was down 0.3% to 7,370 points, by 10:20am AEDT. It was a small drop from yesterday's closing figure (its highest since April).
The iron ore mining giants have fallen sharply, including Fortescue Metals (-2.2%), BHP (-1.5%) and Rio Tinto (-1.1%).
Shares of Origin Energy dropped 2.4% after the company confirmed its potential buyout was being delayed.
Origin is offering more time for its suitor (a consortium led by Brookfield) to finalise its $15.5 billion takeover bid.
Origin Energy takeover delayed
By David Chau
The potential takeover of Origin Energy (by a consortium led by Canada's Brookfield Asset Management) has been delayed slightly.
Origin has extended the exclusivity period for the consortium to finalise its $15.5 billion buyout bid.
If the deal goes through, it will be one of the biggest private equity-backed takeovers of an Australian company.
The exclusivity period has been extended to January 24. It was also the second extension since the talks were first disclosed in November.
Origin Energy did not specify a reason for the extension.
The takeover bid was announced prior to the federal government imposing price caps on gas to appease manufacturers and households suffering from soaring energy prices, partly due to the Russia-Ukraine war.
This buyout will require approvals from the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB) before it can be finalised.
Market snapshop at 8:25am (AEDT)
By David Chau
Here's a quick look at how markets are looking this morning:
- ASX SPI futures: 7,317 points (-0.3%)
- Australian dollar: 69.5 US cents (-0.3%)
- Wall Street: closed for a public holiday
- European markets: Stoxx 600 +0.5%, DAX (Germany) +0.3%, FTSE (UK) +0.2%
- Spot gold: $US1,918 / ounce (-0.2%)
- Brent crude oil: $US84.19 / barrel (-1.3%)
- Bitcoin: $US21,259 (+1.8%)
The local share market is likely to fall in early trade, though it'll be coming off a nine-month high.
Yesterday, the ASX 200 climbed to 7,388 points (its highest level since mid-April).
ASX to slip, as invetors await China economic update
By David Chau
Good morning! I'll be taking you through all the live markets action from ASX open to close, with some interesting bits of economics and company news along the way.
The local share market is expected to start its day lower, with little direction from overseas.
It was a very quiet on Wall Street (given US markets was closed for the Martin Luther King Jr holiday).
However, European markets were trading and the STOXX 600 index jumped to a nine-month high.
China will release some key economic data around 1pm (AEDT). This will include its GDP (gross domestic product), retail sales, unemployment and factory production.
It's worth keeping an eye on this given China is the world's second-largest economy (and Australia's largest trading partner).
The figures will likely show that China's economic growth was much weaker at the end of last year — after mass lockdowns, before abruptly ending its COVID-zero policy and triggering a record spike in coronavirus infections.
We'll bring you across those updates as soon as they're out!
