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Josh Gilbert, market analyst at eToro, outlines three key developments to monitor in Australia for the upcoming week:
Australian Consumer Confidence
In August, Westpac Consumer Sentiment saw a notable increase of 2.8%, surpassing market expectations of a 0.5% rise. Consumer Confidence reached a six-month peak of 85.0, marking its highest level since February. On Tuesday, data from July’s retail trade will provide insight into whether Australians are maintaining spending levels despite ongoing cost of living pressures. The previous month’s retail turnover showed no change, while the Q2 GDP report revealed only a 0.2% growth for the June quarter. This subdued performance was attributed to a decline in household and government spending, potentially impacting this week’s sentiment results. However, recent tax cuts and cost-of-living relief measures, including a $300 energy bill reduction for households, could bolster disposable income and encourage increased consumer spending. These factors might contribute to enhanced consumer confidence moving forward, particularly with additional support such as rental assistance and Centrelink payment increases coming into effect this month.
Global Inflation (US & China)
Inflation data for China and the US will be released this week, with China’s data available on Monday and the US on Wednesday. China’s year-over-year inflation rate is anticipated to rise slightly, although local industry and export markets continue to face challenges. China’s automotive sector, a major export driver, is experiencing difficulties as electric vehicle sales decline in key markets. Previous CPI data from China has shown significant deflationary pressures, and domestic demand remains weak, putting pressure on the government to stimulate spending and revitalize the property market. In contrast, the US is likely to see a September rate cut, with August’s CPI data indicating ongoing deflation. The Federal Reserve’s tightening measures appear to be effective, bringing inflation closer to the 2% annual target. However, there are concerns about a potential recession triggered by an unexpected rise in unemployment, particularly following job reductions in the education and construction sectors.
AI Developments in Australia
The recent announcement of Blackstone’s acquisition of Australian data center specialist AirTrunk for $24 billion has energized Australia’s tech and innovation sectors, particularly in data centers and AI. While Australia may not be widely recognized for its tech stocks, there are notable companies involved in AI, including NextDC, Megaport, and Goodman Group (ASX:GMG). NextDC plays a key role in supporting AI workloads with its high-performance infrastructure, while Megaport offers a platform for connecting IT infrastructure to various cloud services and networks. The demand for AI continues to rise, presenting significant opportunities globally. Major companies like Meta, Microsoft, and Alphabet are increasing their investments in AI, underscoring the substantial potential for businesses engaged in AI technology.
