Prices current around 4:30pm AEDT.
Live updates on the major ASX indices:
After starting the day on a positive note, the Australian share market finished the week in negative territory down 0.4%. The ASX 200 closed at 8294 points
At market close the Aussie dollar was flat at 61.94 US cents.
All sectors except basic materials were in the red.
As we reported earlier, embattled casino operator Star Entertainment has seen its share price plummet with analysts saying it was at risk of collapse.
Its share price closed down 13.5% at $0.12
And that’s it from us on the business blog for the week, but we’ll be back on Monday for a busy week of markets and finance news.
Next week we will have our eye on a few key events including the release of labour force figures on Thursday which will be one of the bits of data the RBA will be mulling when it makes its decision on interest rates next month.
Have a great weekend
As far as charts go, this one is pretty clear:
That large spike is skyrocketing uncertainty on trade policy in Asia, thanks to the huge tariffs promised by incoming US President Donald Trump.
And while it’s pretty certain there will be higher tariffs on Chinese goods, ANZ analysts say the spike is due to it being as yet unclear which other economies in the region will be targeted, and whether universal tariffs are still on the table.
“Given this lack of clarity, financial markets have not fully priced in the extent of trade uncertainty. Investors may still be hoping for a watered-down tariff plan. Financial market volatility is likely to rise once the full extent of Trump’s trade policies becomes clear.
“The Chinese authorities continue to keep the yuan stable, but at some point, they will need to allow the currency to act as a shock absorber. This is the path of least resistance, in our view.”
The sense of entitlement is big in solar panel tariffs rebate. Firstly u pay less for power than those without panels. Appreciate it. Secondly, panels open up the opportunity to save on eg car fuel costs. Thirdly, as a renter without panels or a rebate. I don’t want my taxes paying for your profit. Appreciate the saving and stop whingeing
– Steve
I take your point Steve — there are a lot of people who either can’t afford to install solar panels or don’t own the home they’re living in and simply can’t install them.
Obviously, there is a benefit in reduced power costs for those who have them, even if they end up getting next to nothing for any surplus electricity they export to the grid.
What I would point out though is that the solar feed-in tariffs are not charity — they are the price that energy companies are paying to buy something that they’re then on-selling to other consumers.
At a flat price of 0.04 cents then those energy companies will be getting that rooftop solar for next to nothing. Given very low (sometimes negative) wholesale energy prices in the middle of sunny days, maybe that’s fair enough, or maybe it’s not. I haven’t crunched the numbers.
My colleague Daniel Mercer is the resident expert on all things energy and I’m sure he’ll get around to another piece on plunging feed-in tariffs soon.
For now, here’s a good one he wrote a couple of months back on the flood of rooftop solar.
Solar Tariff 4c not “0.04 cents” – please check your headlines.
– bassborg
From the Victorian Essential Services Commission’s website:
“The Essential Services Commission has released its draft decision on the minimum amount electricity retailers must pay solar customers for the electricity they export into the grid. This is known as a feed-in tariff.
“The proposed minimum flat feed-in tariff is 0.04 cents per kWh starting 1 July 2025, down from the current 3.3 cents per kWh in 2024–25.”
We do make mistakes and very much welcome readers pointing them out so we can fix them, but please check your own facts before hitting the “comment” button.
Why is there scant coverage of the AUD 10 Year Bond Yield including a comparative to like economies being the USA, the UK and NZ – and the impact of these increasing Yields on such as our superannuation accruals?
It appears any media reporting on the circumstances NZ finds itself in being mired in recession with people leaving and seeking opportunity in Australia is banned
This is the alternate comparison for Australia
– Andy
Hi Andy, I agree that NZ is an interesting counterfactual against which to evaluate some of the criticisms about how the RBA and federal government have tackled the inflation problem in Australia.
I’m guessing you missed this piece I wrote late last year?
The share market story of the week on the ASX has undoubtedly been the plunge in Star Entertainment’s share price.
It’s lost nearly half its (modest) remaining value in the past couple of days, falling from 19.5 cents at the close on Wednesday to as low as 10 cents so far today.
The reason was an after-hours trading update on Wednesday that revealed it only has $79 million of cash left as at December 31.
That might sound like a lot, but it has burnt through $107 million in cash (after adjusting for new debt) over the previous three months.
In other words, unless it slows its cash burn or raises new money, it will be insolvent before the end of the current March quarter.
Morningstar analyst Angus Hewitt says the struggling casino operator may not even make it to its half-year results.
“At the current cash burn, the company would be lucky to make it to its interim results on Feb. 28, 2025 without a lifeline,” he explains in a note to clients.
“Operating conditions are weak, with mandatory carded play and poor consumer sentiment weighing on the top line. Compliance and legal costs have also increased.”
Star still has to pay $10 million out of a $15 million penalty from the NSW regulator, and it may face a fine which Mr Hewitt expects to be in the range of $330 million from the anti-money laundering watchdog.
Mr Hewitt believes Star will go to the market and try and sell new shares for 10 cents each to try and raise $150 million so it can access a further $100 million in debt funding.
He now values Star at 20 cents a share, because of the high chance it could collapse.
“We now incorporate a 50% probability that Star falls into administration, and equityholders are wiped out,” he notes.
“Our going concern valuation is AUD 0.40, from AUD 0.50 previously, mainly due to the more dilutive raise.”
That’s if it can find buyers for the new shares, given how much previous investors have lost.
“We still expect a medium-term recovery in operating conditions for casinos,” Mr Hewitt concludes.
“However, Star needs a more immediate solution, and we believe it is unlikely it can trade itself out of this predicament.”
The claim has often been made by politicians and media outlets but never backed up by evidence. Reporter Kenji Sato got to the bottom of it and has an answer:
Prices current around 2:20pm AEDT.
Live updates on the major ASX indices:
Consumer spending rose by 0.4% in November, slower than the 0.9% pace recorded in October, according to Commonwealth Bank’s latest monthly household spending indicator.
As expected, Black Friday sales boosted spending in some areas, though it seems we were less eager to part with our cash than previous years, perhaps due to the cost of living crisis.
We spent less on services and more on goods, according to the data (and as noted in yesterday’s retail sales figures).
Growth in non-discretionary spending (+0.5%) was higher than discretionary (+0.4%)
By category, the biggest contributor was the 0.9% increase in recreation & culture – with some big box office releases seeing more of us head to the cinema.
Interestingly, spending on alcohol & tobacco continued to decline, with overall spending below pre-pandemic levels.
Tarrif drop price is that Vic only or other states as Nsw is essential energy
– Rob
Hi Rob, today’s story is only about Victoria but if we hear of any changes in NSW we will let you know
Who doesn’t love a bargain? Buying discount books online has soared in popularity — but at what cost?
A lot, according to this article which points out in the past decade, the number of bookstores in Australia has more than halved and the average annual income of a practicing author is $18,200. That’s well below the poverty line.
Your comment re feed in is misleading, it should say 0.04 $
– Mig Guyer
Actually, 0.04 cents (not dollars) is correct. It might not sound like much, but that’s what the Essential Services Commission says on its website
The Australian share market is down this Friday afternoon, with the All Ordinaries -0.5 at 8536 points and the ASX 200 -0.5% to 8287.
All sectors are in negative territory except utilities.
Here are the stocks making the biggest losses and gains right now on the ASX 200:
Star Entertainment is still feeling the pain after it revealed in an update yesterday it had dwindling cash reserves.
The Aussie dollar is at 61.97 US cents, after hitting a fresh low overnight of 61.70 overnight.
Rabobank has released its commodity snapshot, which shows a mixed bag of conditions across global sectors.
Wheat is down by almost 3% so far this year but factors such as cold weather in the US and Russia (major wheat suppliers) and the war in Ukraine could change that.
Coffee prices remain high and producers are on alert to any impact from tariffs flagged by incoming US president Donald Trump.
Here’s a quote from the report:
“It is still unclear how general the US tariffs will be, and whether they will affect coffee imports. Most likely, the US will use statecraft to bring many countries under its orbit of influence and away from that of China. Coffee producers are unlikely to be exempt. We believe this tariff threat is creating a rush to import into the US.”
Here’s the full list of global price movements in key commodities:
Hi Rachel, Just wanted to vent on the solar feed-in issue. We are all charged a daily standing charge – for “poles and wires”. Yet, I don’t charge my retailer for the hardware on my roof. I get a paltry 4c feed-in (capped) yet am charged 32c for what I use. Governments at all levels (and of all hues) encouraged installations (and continue to), yet large-scale investment in national storage batteries is patchy at best. Now the feed-in is virtually disappearing and home batteries are still pretty expensive. Seems like we are punished for trying to do our bit!
– Andrew
Hi Andrew, thanks for your comment.
As a homeowner who installed solar on my roof five years ago, I feel your pain too.
NSW has just launched a subsidy scheme to encourage home battery installations, which is worth around $160 per kW/h, so around $1,600-$2,400 for the common types of residential batteries.
Not sure how much that shifts the dial on the economics of a battery for most households, but obviously the falling feed-in tariffs are a bit of a stick that is pushing more people towards finding that a battery might stack up financially.
It’ll be interesting to see if more states adopt the carrot of a subsidy to complement the stick of falling feed-in tariffs.
ANZ has joined CBA in forecasting a February rate cut, after Wednesday’s November monthly data from the ABS showed core inflation falling faster than either it or the Reserve Bank had previously expected.
The bank is now expecting the RBA’s preferred measure of “trimmed mean” inflation to come in at just 0.5% for the December quarter — the lowest result since June 2021.
That would see the annual rate drop to 3.2%, a bit below the RBA’s current forecasts, and annualised core inflation over the past six months is expected to be 2.6%, near the middle of the central bank’s 2-3% target.
Moreover, services inflation, which has worried the RBA, is also expected to fall sharply in the quarterly data to 4.1% — the lowest since September 2022, and not too far above pre-COVID rates.
“We think this will be enough for the RBA to cut the cash rate by 25bp at its February meeting,” write economists Catherine Birch and Adam Boyton.
They believe it is evidence that the NAIRU — the level of unemployment consistent with stable inflation — is much lower than the RBA currently believes.
“Although the labour market remains resilient, the sharper-than-expected slowdown in wage growth in 2024 and weaker inflation forecast for Q4 suggest that an unemployment rate at or just below 4% may be consistent with underlying inflation in the target band,” they explain.
The most recent data had unemployment at 3.9%.
However, they caution that a rate cut in February is far from certain and, even if it happens, there may not be a lot of follow-up rate cuts.
“A hold in February is not off the table, however, if the RBA puts more weight on its concerns that the persistent tightness in the labour market and expected recovery in household spending growth still pose upside risks to inflation,” they note.
“We maintain our expectation of only two 25bp cuts in this cycle, in February and August 2025, taking the cash rate to 3.85%.
“We think the RBA will take a cautious approach in dialling down the restrictiveness of current policy settings, rather than February being the start of an aggressive easing cycle.”
You can read about the monthly inflation figures that sparked the change in forecast in my article from Wednesday.
Victoria’s Essential Services Commission has released its draft decision on the minimum rate electricity retailers must pay solar customers for the electricity they export into the grid — known as a feed-in tariff.
The ESC has proposed dropping the rate to 0.04 cents per kilowatt hour (kWh) from the current 3.3 cents starting July 1, 2025.
The Commission has also recommended a time-varying feed-in tariff, which is a rate that varies depending on the time of day.
Those rates range from 0 cents to 7.5 cents per kWh.
A varying rate would incentivise solar customers to export electricity when demand is high, rather than when the grid is already saturated with supply.
It means customers will earn much less than they have been for supplying electricity to the grid and it could discourage people from installing solar panels and also increase demand for home batteries.
On Thursday I wrote this story about YouTube creators taking PayPal to court over its extension Honey, which offers shoppers free discount codes.
I spoke to one of the plaintiffs last night, UK gaming YouTuber Josh Strife Hayes, who said the case was a massive deal for social media creators.
“The creator economy runs on a great deal of trust. While larger creators with teams can monitor click-through rates and estimate income, smaller creators don’t have the time or resources to track every aspect, and so they trust companies to act morally and ethically.
“This is a shock to the affiliate marketing economy, the erosion of trust will ripple out to many other companies.”
If you missed it you can catch up on the story here:
Hi Rachel
This comment you made about yields seems contradictory – yields dropping to an 8 month high? Can you explain? Thanks
“Treasury yields have dropped, with 10-year yields hitting an eight-month high”– Ajay
That did sound contradictory, apologies Ajay.
US Treasury yields have eased slightly after hitting an eight-month high on Wednesday local time, as investors shifted their expectations for further rate cuts by the Fed Reserve.
The benchmark 10-year Treasury yield fell on Thursday local time to 4.7%, a small dip from a peak the day before, which was the highest since April last year.
Drew Matus, chief market strategist at MetLife Investment Management told Reuters it was a sign investors were being cautious ahead of US payroll data due to be released Friday local time.
That data could provide further insight into the Fed’s plans for rate cuts this year.
Currently, markets are anticipating just one cut of 25 basis points in 2025.
