AUS
NZ
UK
CA
USA
IND
Highlights
- ASX 200 closed 0.44% higher, trimming early gains.
- Materials and Energy sectors led, while Utilities fell.
- KPMG forecasts RBA rate cuts starting in February 2024.
The Australian stock market (ASX 200) closed 0.44% higher at 8,223.5 points, despite trimming its early gains. This performance follows a brief recovery in Chinese and Hong Kong markets. The rebound in China came after a sharp 7% decline the previous day, although the market struggled to regain significant momentum today.
The Materials and Energy sectors performed the strongest on the ASX, while the Utilities sector ended in the red. Investors appeared to respond cautiously to developments in China, where government actions to stabilize the markets were under close watch.
Chinese Market Recovers Slightly
Chinese and Hong Kong stocks opened higher after the People’s Bank of China (PBoC) announced a 500-billion-yuan liquidity facility aimed at providing support to securities, fund, and insurance firms. This liquidity measure allows eligible firms to pledge assets such as bonds, stock ETFs, and shares from companies listed on the CSI 300 index to access liquid assets, including Treasury bonds. This initiative is part of a broader stimulus plan rolled out in late September, amounting to roughly US$70.60 billion.
Despite the positive start, the Chinese markets struggled to build significant momentum as concerns over the economic outlook persisted.
Interest Rate Cuts Expected from RBA in Early 2024
KPMG reaffirmed its expectations for rate cuts from the Reserve Bank of Australia (RBA) beginning in February 2024. Chief Economist Dr Brendan Rynne predicts an initial reduction of 25 basis points, followed by several more cuts, potentially lowering the cash rate to about 3% by early 2026.
Rynne highlighted the increasing financial pressure on Australian households, with weak consumer spending and declining gross disposable income. Although Australia may avoid a technical recession, the six consecutive quarters of declining GDP per capita indicate a continuing drop in living standards. Real household disposable income and consumption have also decreased, reflecting the challenging economic conditions for many families and businesses.
This user-friendly article incorporates relevant company names and tickers while maintaining a professional tone without the use of restricted terms.
