- Inflation rate is taking leaps in Australia with CPI (Consumer Price Index) surging 1.8% in the June quarter.
- Australians and businesses are also worried because of constant RBA interest rate hike, rising prices of commodities and no improvement in wages.
- Amid all the industries, the sector most likely and directly to get impacted by inflation and RBA’s interest rate hike is the Financial sector.
- Another factor concerning Australian businesses is the rise in Monkeypox cases and spread of new Omicron virus.
Of late, Australia has been struggling with rising inflation and constant interest rate hikes by the Reserve Bank of Australia (RBA). The sector that is most vulnerable to RBA’s interest rate hike and inflation is the ASX 200 Financial sector. Today, the S&P/ASX 200 Financial sector (INDEXASX:XFJ) closed 0.378% up at 6341.9 points on the ASX today.
RBA’s rate hike:
The Reserve Bank of Australia (RBA) has raised interest rates by 50 basis points on 2 August 2022. The central bank has anticipated the inflation to touch 7.75% by the end of the year. The slowdown in consumer spending will result into slower, falling economic growth.
Philip Lowe, Governor, RBA, has stated that this rise should witnessed as a step towards normalising monetary situations in Australia.
The increase in interest rate has led the cash rate to increase to 1.85 points from 1.35 points now, aligned with the prediction of some experts.
Consumer Price Index for June 2022 quarter:
The Consumer Price Index (CPI) is a crucial concept in economics that is used to calculate the average difference in price paid by customers for purchasing goods over a specific period of time.
The Australian Bureau of Statistics (ABS) released the updated Consumer Price Index last week. As per the release from ABS, the CPI for the June quarter went up by 1.8%. As a response to this hike, ABS said that this was the ‘second highest’ CPI hike ever since Goods and Service Tax (GST) was introduced. This is likely to impact businesses across all the sectors in Australia.
What else is impacting businesses in Australia?
Rising cases of Monkeypox and spreading of new Omicron virus strain are bound to worry Australian business owners now. These contagious and harmful diseases come with the fear of yet another lockdown, border closure, supply chain disruption, etc.
Here in this article, we will briefly discuss about the Australian ‘big-four’ banks- Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking Corporation; and see how these stocks have fared on the ASX today.
Meanwhile, the S&P/ASX 200 Banks Index (INDEXASX:XBK) closed at 2604.2 points, up 0.684% on the ASX today.
Australia and New Zealand Banking Group (ASX:ANZ)
Australia and New Zealand Banking Group Limited (ASX:ANZ) shares closed in the green territory today. ANZ’s share price stood at AU$22.810 per share, gaining marginally by 0.307% on the ASX (2 August).
As per a recent update, ANZ has agreed to acquire the banking arm of Suncorp (ASX:SUN) for AU$4.9 billion. According to the deal between ANZ and Suncorp, the bank will continue to operate under the umbrella of Suncorp for the next five years.
The Australian banking sector considers this deal to be one of the most significant deals since 2008. This deal is likely to help ANZ to strengthen its position in Queensland and add more customers from there.
The share price of Australia and New Zealand Banking Group has fallen almost 18% on the ASX in last 12 months. Moreover, ANZ’s share price has fallen 17.89% on year-to-date basis.
Commonwealth Bank of Australia (ASX:CBA)
Commonwealth Bank of Australia (ASX:CBA) shares closed 0.880% higher at AU$101.970 per share on the ASX today.
Commonwealth Bank’s share price has gained 0.51% higher on the ASX in last 12 months. Furthermore, CBA's year to date share price has shed off 0.53% on the ASX today.
Commonwealth Bank is one of the biggest banks in Australia, holding a market capitalisation of AU$171.99 billion.
As per a recent update, Commonwealth Bank has opened a new technology hub in Queensland that will deploy about 400 tech professionals such as software developers, cloud engineers, and cyber experts. In February, the bank opened up one such tech hub in Adelaide that attracts the best talents from South Australia. In future too, the bank aims to open up several such technological hubs that can gather the best of talents across several parts of Australia.
Image source: © Rummess | Megapixl.com
National Australia Bank Limited (ASX:NAB)
National Australia Bank Limited (ASX:NAB) shares buzzed in the green territory today and closed marginally higher on the ASX today. NAB’s share price stood at AU$30.960 per share, up 1.242% on the ASX today.
National Australia Bank’s share price has appreciated by 17.54% on the ASX in last 12 months. On the other hand, NAB’s year-to-date share price gained has gone up 5.31% on the ASX today.
Westpac Banking Corporation (ASX:WBC)
Westpac Banking Corporation (ASX:WBC) shares closed 1.5% higher at AU$22.00 per share on the ASX today.
In a year’s time, Westpac’s share price has declined by 11.29% on the ASX. On Y-T-D-basis, Westpac’s share price gained by 1.57% on the ASX today.
Yesterday (1 August), Westpac announced that it has completed the sale of its life insurance arm to TAL Dai-ichi Life Australia Pty Limited for AU$900 million. The divestment was initially proposed on 9 August 2021.
The bank expects to report a net loss after tax of AU$1.37 billion after the divestment of its life insurance arm. Out of the total loss amount, Westpac has already reported AU$0.27 billion of loss in FY21 financial results. Furthermore, the bank might be reporting a loss of nearly AU$1.10 billion of loss after tax in its FY22 financial statements.