Market Update - 23rd March 2024

Written by William Cooper

Domestic:

 The RBA once again came together on Wednesday the 19th of March for a much-anticipated announcement surrounding interest rates, and the possibility of seeing the rate start to edge its way back down to the target 2-3%. The RBA, for the third consecutive meeting, kept rates unchanged at 4.35% and proceeded to give the Australian people no real indicator of any eases. RBA Governor, Michelle Bullock, believes she needs to see more evidence of inflationary easing before acting on any rate cut decisions. However, economists are not worried as it was made clear that the Governor’s stance had shifted from that of a bullish stance to a neutral one, giving hope that rate cuts are not far away.

 In equities, both the Energy and Utilities sector are the leaders for the fortnight, sitting at 1.1% and 1.5% growth respectively, outperforming the rest of the ASX. Gains in the energy sector were heavily supported by the price of oil, which has increased by 8% over the last fortnight, and 19% since Jan 1. The utilities sector has also advanced, however there is no real price sensitive news to explain the push. In other sectors, Technology is up 0.9%, whilst Consumer Discretionary continued its decline, before rallying late in the week to remain even over the fortnight, and the ASX200 is down 1.1%.

International:

 The S&P continues to soar, going up by 1.4% on the fortnight, having already hit its last peak since the last Salt update. Most sectors had strong contributions, and even those that did not perform were not a substantial hinderance to growth.

 The US Federal Reserve decided to hold its interest rate at 5.5% after inflation data showed consumer prices ticked up to 3.2%, higher than its previous month. It is a noticeable difference from its peak of 9.1%, however it is still a percentage point higher than the Feds target rate of 2%. Much like the RBA the Federal Reserve are expecting to see signs of cooling inflation before considering any rate cuts.

 The Bank of Japan has ended its negative interest rate regime, finally hiking rates, beginning at 0.1%. In January 2016, the BOJ set the rate at -0.1%, meaning lenders must pay to put their money in the bank. Japan suffered from price erosion, meaning they had issues with falling prices in their economy, which despite sounding great, was met with falling wage rates. It is a radical tool, but the Japanese government are now hoping for long-term sustainable growth, and through putting rates back into the positive, they wish to encourage investment, price increases and wage increases. This decision was reflective of their market performance over the last fortnight, outperforming every other major market.