Inflation rules out rate cut; Woolies disappoints; Microsoft, Apple hit $US4tr

Inflation rules out rate cut; Woolies disappoints; Microsoft, Apple hit $US4tr

News in brief

Woolworths has reported disappointing sales for the September quarter, despite a push to cut prices, but chief executive Amanda Bardwell insists there are some green shoots at the supermarket.

 

The federal government’s $10 billion Housing Australia Future Fund is being audited, after criticism it isn’t delivering enough social and affordable housing. The fund is supposed to deliver 40,000 new homes over five years. So far, the Fund has delivered about 500 homes.

 

One of the country’s biggest health insurers, Medibank Private, wants to more than double earnings from its health services business to by 2030. It wants to shift from its core insurance business and reposition itself as a health care provider over the next five years.

 

Social media groups are scrambling to find ways to operate under the incoming rules banning under-16-year-olds from using their apps with Snapchat, for example, set to allow 15-year-olds to freeze their accounts until they turn 16.

 

Ahead of some of the biggest tech companies reporting over the next 24 hours, both Microsoft and Apple have pushed through the $US4 trillion market capitalisation figure. It happened after OpenAI said it was giving long-time backer Microsoft, 27 per cent ownership of the company.  That deal values OpenAI, which isn’t listed, at $762 billion.

Fear-o-meter

Annual trimmed mean inflation is now running at three per cent – at the very top end of the RBA’s target band. The headline inflation rate, at 3.2 per cent, is a 15-month high. There is no chance of a rate cut when the Reserve Bank board meet next week.

 

There were worrying signs in yesterday’s Australian Bureau of Statistics release. Price rises were widespread across the economy. Goods prices were rising again, while services were also more costly. And it looks like businesses successfully passed on some higher costs – like electricity, post rebates – rather than crimping profits.

 

Not only is there zero chance of a cut in interest rates next week, but December is off the agenda as well.

 

Chief economists at the big banks, including Commonwealth Bank and Westpac, dialled back their expectations of rate cuts after the data was released yesterday.

 

It is quite possible that after just three interest rate cuts, this cycle is over and whatever you are paying for your home loan, or on your credit card or business loan, is what you will be paying for some time.

Fear & Greed Q+A today

On the push to get major global investors into Australia, and how our $4.3 trillion super sector gives us soft power internationally:

 

"It is incredible power. And increasingly, when the world is entering a very capital intensive phase of the economic cycle, when you have companies looking to deploy, needing to deploy billions of dollars to build an AI digital infrastructure ecosystem, when you have a climate crisis that needs to be solved, when you have much parts of the advanced world having to deal with housing challenges, and when you have a lot of the developing world that is hungry for investment to grow their economies as well, having spare change gives you soft power.

 

Combine that with Australia's reputation as a democracy, rule of law, as a friendly country that's open, we should not undersell what we've built here. And part of what we're trying to do today is to just let the Australian people know that this is an amazing achievement. It's adding to our arsenal of influence. And we should be thinking strategically about how we use it so it's for the benefit of the nation, not just the benefit of those who just have a super account."

Hopes of a rate cut on Melbourne Cup Day next week have been dashed with a surprise jump in inflation – the first annual increase in underlying price measures in three years. September quarter headline inflation came in at a whopping 1.3 per cent, thanks in part to the end of government electricity rebates. The all-important underlying or trimmed mean measure of inflation jumped one per cent, well above the Reserve Bank’s forecast of 0.6 per cent. The September quarter reading is only one number from the ABS, but according to market economists, it has pretty much ended the interest rate cutting cycle, at least this year.

Greed-o-meter

	Category	Contribution %	Type
1	Electricity	0.27	Goods
2	Domestic Holiday Travel & Accommodation	0.19	Services
3	Property Rates & Charges	0.17	Services
4	New Dwelling Purchase by Owner-Occupiers	0.15	Goods
5	International Holiday Travel & Accommodation	0.14	Services
6	Rents	0.11	Services
7	Gas & Other Household Fuels	0.09	Goods
8	Automotive Fuel	0.08	Goods
9	Tobacco	0.07	Goods
10	Visual & Computing Media & Services	0.06	Services

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These are the main contributors to the increase in inflation for the September quarter, according to AMP's breakdown of the ABS data.

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Source: ABS, AMP