Hopes rate hikes on pause; SpaceX $US2 trillion IPO; could house prices fall 10pc?
News in brief
The S&P/ASX200 finished up 1.5 per cent to 8622 points yesterday, helped by the prospect of a delay in rate rises. It was the best session in six weeks with eight of the 11 indices closing higher.
Investment bank Morgan Stanley has forecast that changes to CGT and negative gearing in last week’s budget could trigger the largest correction in the Australian housing market in 40 years, as investors shift their asset allocation away from property.
The Fair Work Commission has ruled that a mother should be allowed to work from home, seven of the eight days in her working fortnight, and on the eighth day, she can arrive at work late, so she can drop her children to school.
Collingwood’s Scott Pendlebury will this weekend play his 433rd game of football – something no other AFL or VFL player has done. And his payday on the back of merchandise sales could be worth more than his annual salary.
Elon Musk’s SpaceX has filed for the largest ever initial public offering, potentially valuing the company at $US2 trillion.
Fear-o-meter
Paul Bloxham, Chief Economist, Australia, NZ & Global Commodities, HSBC
"Today's jobs market figures were the sort of decisive marker that we have been on the look out for that would confirm that the economy has already entered into a downturn - as the key sentiment indicators have already been showing.
"And, critically, the sort of indicator we have been looking for to support our view that the RBA is unlikely to increase its cash rate further.
"Of course, getting the timing right on exactly when the jobs market figures would crack was always going to be tricky - partly because the labour force survey is volatile and partly because the jobs market tends to lag the rest of the economic cycle.
"Today's figures look fairly decisive.
"And, taken together with a sharp fall in consumer and business confidence, a sharp fall in auction clearance rates and indications that housing prices are falling too - paint a picture of an economy that is already in a downturn."
Fear & Greed Q+A today
On blockbuster IPOs for SpaceX and OpenAI, another set of stellar results for Nvidia, and whether the AI boom is a bubble:
"No bubble here in my view. Nvidia just generated US$40 billion in free cash flow in the quarter - that’s a huge, huge number.
When we think about bubbles, people always go back to the dot-com bubble, but we’re not seeing anything like that right now. We’re seeing businesses continuing to generate revenue, continuing to generate profits.
And this technology is changing industries every single day. We’re just at the very early innings of this. This isn’t a one-year story - this is a decade-long story for these businesses.
What we’re also seeing now is the broadening of the AI trade. Nvidia’s networking revenue - basically the infrastructure layer around AI factories - is becoming a huge opportunity too. So this isn’t just about chips anymore."
The unemployment rate jumped to 4.5 per cent last month as the number of employed people dropped for the first time this year. The figure could trigger a pause in interest rate hikes, at least in the short term, according to economists.
The unemployment rate is now at a level above Federal Treasury and the Reserve Bank’s forecasts, and that’s before the full impact of three rate hikes and soaring prices on the back of the Middle East conflict kick in. Overall, the economy shed 18,600 jobs in April.
Greed-o-meter
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