AI leaders' dire warnings; ASX wipes out 2026 gains; good news for housing market
News in brief
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Fear-o-meter
Betashares Chief Economist David Bassanese on interest rates:
To my mind, the case for a September rate hike remains unconvincing and the RBA is, at this stage, still more likely to keep rates on hold.
Why? The higher-than-expected July CPI report could simply be monthly volatility, especially given the more benign Q2 inflation outcome. And while Q2 GDP was a touch higher than expected, it still revealed an economy growing at a below-trend pace.
House prices are still falling and, unlike past interest-rate driven cycles, no-one can be confident the decline will remain modest given the massive property tax changes in the Federal Budget. Last week’s business and consumer surveys also revealed a notable buckling in confidence.
In the short term, the rise in oil prices will cause volatility in both equities and bonds, with the cure obviously a cessation of hostilities in the Middle East. However, that seems to be a constant mirage for markets.
Fear & Greed Q+A today
On the week ahead for the economy, including a quarterly update on population and immigration:
“It does provide a bit of a reality check on the fact that GDP is growing at 2 per cent. So superficially, that's quite good. But population's growing at 1.5 per cent, in annual terms. So aside from the quarterly volatility, per capita GDP is not increasing by all that much.
So that's where consumers are feeling a bit of pressure. Things are moderate. That's important for consumer sentiment — how are we going, and whether the economy's actually making genuine progress for the hard-working Australians that are in our economy.
It also is important because, as we've been discussing for a long time now, it's a driver of demand for housing. If population's increasing rapidly, you need houses. Whether they're rented or bought, in a way doesn't matter in the short term, but there's pressure in the housing market.”
The leaders of some of the world’s biggest artificial intelligence companies are calling for a slowdown in the development of their most advanced models, amid growing concern about the risks of increasingly powerful AI.
Anthropic CEO Dario Amodei has proposed new safety measures, including independent third-party evaluators with deep access to AI systems, while OpenAI boss Sam Altman backed the idea and Elon Musk said Amodei was right.
The significance is the degree of agreement. AI leaders have warned about safety before, but a coordinated push to slow development is unusual in an industry built around racing competitors to launch more powerful models.
The debate is becoming increasingly important in Australia too. The Albanese government has shifted towards a more interventionist approach to AI, while concerns are growing about the enormous energy and water requirements of data centres.
Greed-o-meter
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Smartphones keep getting more expensive. Not helping is the cost of storage - the AI boom is making memory chips a scarce commodity. As a result, if you're looking at the new iPhone Duo with two terabytes of memory, be prepared to pay $US3,199 in the United States or $5,899 AUD here at home. That's right... nearly $6,000 for a phone.
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The ASX has wiped out its gains for 2026, after falling more than 3% last week as surging oil prices, higher bond yields and expectations of further interest rate rises hit equities. Australia is now among the worst-performing major developed sharemarkets this year.
There was finally some better news for housing, with the preliminary combined capital-city auction clearance rate jumping six percentage points to 58.5%, its strongest result in 19 weeks. It remains well below the 75% recorded a year ago.
Domino’s is changing its recipe for winning back cash-strapped consumers, cutting its menu and moving away from constant discounting towards everyday value, including a new 16-inch New York-style pizza starting at $18.
A new broadacre weedkiller could save Australian farmers billions of dollars by tackling herbicide-resistant weeds. Bayer hopes Icafolin will be introduced in 2028, although critics are raising questions about its long-term health and environmental effects.
The leaders of China, Russia, India, Iran and other emerging powers have taken aim at US policies at a BRICS summit in New Delhi, criticising the Middle East war, tariffs and sanctions while calling for restraint in the conflict.