26 June 2023 | Weekly Snapshot

Did you know?

U.K core inflation unexpectedly rose to 7.1% annually last week, the highest since March 1992.

Market Movements

Australian Share Market (ASX 200) – down 2.1%. Defensives like Consumer Staples (+2.07%), Utilities (+1.47%) and Health Care (+0.29%) were the only sectors higher with Energy (-4.85%), Info Tech (-4.29%) and Materials (-3.79) leading the broad-based declines. The ASX 200 was higher earlier in the week with the bullish narrative behind the recent equities rally continuing to largely revolve around soft landing expectations and disinflation themes gaining traction. The larger than expected rate hike from the Bank of England following the resurgent U.K inflation data last week provided a reminder that inflation is still difficult to slay in certain economies. The ASX 200 fell sharply late in the week on weak offshore leads, possibly due to some profit taking as global equities looked a bit stretched, but also the potential for a more prolonged global tightening cycle due to sticky inflation pressures in parts. The RBA minutes showed the decision to hike the cash rate earlier this month was a closer call than the policy statement released at the time may have suggested. The case for holding now rests on slowing growth and the risk that rate hikes to date deal a bigger-than-expected hit to the economy. But with inflation still too high the RBA decided to hike rates on the increased risk of inflation taking longer to return to target. Following the recent strong employment data, resilient retail sales, persistent inflation and resurgent property market, expectations are now for 2 more RBA rate hikes to 4.6% from the current 4.1% over the coming months. Rating agency S&P in a presentation last week showed that under their stress test scenario the Aussie housing market could cope with another 50 basis points of RBA rate hikes although another 100 basis points of hikes would see top rated Residential Mortgage-Backed Securities under pressure. While CoreLogic reported the proportion of investor residential listings hit 36.3% in Sydney last month, the highest in two years with Investor listings in capital cities now above the 10-year average.


U.S. Share Market (S&P 500) – down 1.39%, with the Dow (-1.67%) and Nasdaq (-1.44%) also lower with the S&P 500 and Nasdaq snapping five- and eight-week winning streaks respectively. It was a shortened holiday week in the U.S with the equities rally under pressure all week. Following the recent gains, the latest Investors Intelligence report noted that bulls had ticked up to 54.3% last week, just below the 55% they rate as the initial caution level while bears fell to 20% for a bull-bear spread of 34.3%, the largest since November 2021. Federal Reserve Chair Powell appeared before Congress to deliver his semi-annual monetary-policy testimony with no real surprises. He highlighted the process of getting inflation back down to 2% has a long way to go, that nearly all Fed members expect it will be appropriate to raise rates further by year end pointing to the recently upwardly revised dot plots indicating two more rate hikes, but also added that further rate hikes are to be done at a more moderate pace. The May U.S housing starts and permits smashed expectations last week, up 21.7% and 18.5% for the month respectively. The 291K increase in total housing starts was the biggest monthly increase in on record leaving economists stumped. May existing home sales also beat expectations in another decent week for US housing data. The report noted inventory was up 3.8% for the month but still tight at just 3 months’ supply, while median home prices are down 3.1% for the year. U.S manufacturing sector weakness persisted with the flash manufacturing PMI down 2.1 points for the month to 46.3, below the 48.4 expected and the lowest since December last year. The report noted that cost pressures continued to ease with both input prices falling the fastest, and selling price inflation the slowest, in over 3 years. The Services PMI fell 0.8 points to 54.1 largely in line with expectations and remains strong holding around the highest levels in a year with new orders increasing at a strong rate, and export orders rose with business confidence the highest since May 2022.

Portfolio Movements

Amazon’s (AMZN) cloud unit AWS announced last week they will allocate $100 million for a centre to help companies use generative artificial intelligence. Amazon beat Microsoft and Google to the business of renting out servers and data storage to companies and other organizations and enjoys a strong lead in the cloud infrastructure market, although those companies have had higher profile entries into AI more recently. AWS CEO Adam Selipsky said “AI is going to be this next wave of innovation in the cloud,” and that “It’s going to be the next big thing that pushes even more customers to want to be in the cloud. Really, you need the cloud for generative AI.”


Telstra (TLS) announced last week it will consider the Australian Competition Tribunal’s decision to not grant authorisation for their landmark Multi-Operator Core Network (MOCN) agreement with TPG. With new Telstra CEO Vicki Brady saying the outcome was disappointing, particularly given the overwhelming support the proposal had received from regional Australia, adding “With mobile data demand currently growing at around 30% per annum, there are essentially two ways to add capacity to meet this growing demand – get access to more spectrum or build more towers.” Ms Brady said investing in more towers to add capacity in regional Australia was not always commercially viable or an efficient use of capital or government funds, especially given there was a large amount of spectrum not being used and it wouldn’t result in any material increase in coverage.


Woodside (WDS) announced final investment decision to develop the large, high-quality Trion resource in Mexico with first oil targeted for 2028. Trion is in water depth of 2,500m, approximately 180 km off the Mexican coastline. It was discovered in 2012 by PEMEX with BHP Petroleum acquiring an interest in 2017 which subsequently became part of Woodside’s portfolio last year. The forecast total capital expenditure is US$7.2 billion (US$4.8 billion Woodside share) with the development expected to deliver strong returns to as well as economic and social benefits to Mexico. The investment is expected to deliver an internal rate of return (IRR) greater than 16% with a payback period of less than four years.

The Week Ahead

Domestic economic highlights this week include Retail Sales on Thursday and Private Sector Credit on Friday.

International highlights include German IFO business surveys tonight, with U.S Durable Goods, Consumer Confidence and New Home Sales tomorrow night, and U.S Wholesale Inventories Wednesday night. Eurozone Economic Confidence is Thursday night along with the final U.S Q1 GDP figures. Friday night is Eurozone CPI and Unemployment Rate along with the highlight of the week – U.S Personal Consumption Expenditure.

Corporate reporting is quiet again this week with just a research and development day tonight for Novo Nordisk.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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