House prices fall, Woolies warning on bread, milk, veges; LIV Golf collapse
News in brief
Brent crude touched $US126 a barrel yesterday as investors grappled with the likelihood that the Strait of Hormuz will stay shut for some. It is the highest price since a brief spike in June 2022 and will mean petrol and diesel prices are set to rise.
Woolworths boss Amanda Bardwell expects prices of vegetables, milk and bread to increase as suppliers get hit by fuel and fertiliser shortages, reflecting the Middle East conflict.
Treasurer Jim Chalmers has hinted that any change to capital gains tax and negative gearing will be accompanied by transitional arrangements that will give some protection to people who already hold assets.
Four of the biggest companies in the world – Microsoft, Meta, Amazon and Alphabet, owner of Google – have released March quarter results, and based on share price reactions, Alphabet was the winner with its cloud services division reporting growth of 63pc, while the loser was Meta, home of Facebook, Instagram and WhatsApp.
LIV Golf executives were expected to confirm to players overnight that Saudi Arabia’s funding of the circuit will cease at the end of the year, triggering a scramble for some of the world’s best golfers who shunned long-established tours to play for the Saudi Public Investment Fund backed tournament.
Fear-o-meter
Warren Hogan, EQ Economics, on the next fortnight:
The next two weeks will define the Australian government’s economic policy response to both the global energy shock from the Iranian war as well as the overheating domestic economy. At the time of the December 2025 Mid Year Economic & Fiscal Outlook (MYEFO) the Treasury was not convinced that rising inflation was more than a temporary phenomenon, forecasting a quick return to the RBA target in FY27.
By the time the RBA hiked in February, it was clear that the resurgence of inflation was not temporary. At the time of the second rate hike in March, it was clear for all to see that the fiscal and monetary policy strategies of the last three years had failed to stabilise the economy. We were on an unsustainable path.
War muddies all waters. But we should not allow the conflict in Iran to define the macroeconomic policy response. Recognition that we need tighter monetary and fiscal policy to deal with what is essentially an overheating economy should be at the centre of the RBA’s deliberations next week, and the Government’s Budget the following week.
The supply shock emanating from the Middle East does not change the essence of what is required, it brings urgency, some added complexity and more agility to the task of implementing tighter policies, but the only rationale for holding off on tightening policy is fear. Fear of the unknown, and fear of political repercussions.
Fear & Greed Q+A today
On the importance of understanding the underlying assets of fixed income investments, and the relative resilience of Australian mortgages:
"If we look at history, there have been two major tests of the Australian credit market — the global financial crisis and the early 1990s recession.During the GFC, there was a spike in arrears, but that didn’t translate into losses across the major banks or investment-grade securitised credit.
If you go back to the 1992 recession, which is one of the most meaningful comparisons, there was high unemployment and high interest rates — but losses on ANZ’s mortgage portfolio were around 11 basis points.
Compare that to commercial property losses of over 23%, and it highlights the difference in asset quality. Even under severe stress, residential mortgages have proven to be very stable."
General information only. Seek professional advice tailored to your circumstances before making investment decisions.
House prices in Sydney and Melbourne are going backwards, and across the mid-sized capitals – Brisbane, Perth and Adelaide – momentum has slowed as higher interest rates and the ongoing cost-of-living crisis, exacerbated by petrol prices, start to bite.
Capital city home sales are down more than five per cent compared to a year ago, according to Cotality.
The lower-priced segments of the markets across capital cities are the only ones showing price increases. Those homes are supported by first home buyer incentives and investor activity.
Cotality’s national home value index rose 0.3 per cent in April, the slowest pace of growth since January 2025, just ahead of a rate cutting cycle. The national figure was dragged lower by Sydney and Melbourne, where values fell 0.6 per cent over the month.
Greed-o-meter
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