Market Update: Economic Forecasts and Key Developments
As we navigate through the latter part of December 2024, the economic landscape reveals a mixture of growth and concern over fiscal policies, particularly surrounding the Australian and U.S. markets. This summary captures the latest updates impacting investors and key stakeholders as they brace for further developments and announcements.
Market Snapshot as of December 17, 2024
The Australian market has experienced a slight downturn, with the ASX 200 futures showing a decline of 0.1%, resting at 8,313 points. The Australian dollar has similarly weakened, falling 0.6% to 63.32 US cents. In international markets, major indices have reflected a similar negative trend: the S&P 500 and Nasdaq both recorded losses of 0.6% each, while the FTSE dropped by 0.8%. The EuroStoxx index experienced a decline of 0.4%.
In terms of commodities, prices have also shown bearish tendencies. Spot gold is trading at $US2,644 per ounce, down 0.3%, while Brent crude oil has dropped 0.8%, priced at $US73.34 per barrel. Iron ore has also seen a decline, with prices dwindling by 0.5% to $US104.50 per tonne. Conversely, Bitcoin bucks the trend, increasing by 0.7% to $US106,744, indicating a faith in cryptocurrency amidst uncertainties in traditional markets.
Budget Deficit and Tax Concessions Discussion
The upcoming Mid-Year Economic and Fiscal Outlook (MYEFO) is introducing significant discussions around the expected reversion to budget deficits in Australia. The Commonwealth has struggled with a structural deficit for over a decade, prompting calls for fiscal strategies to address spending cuts and taxation measures. The report from Treasury highlighted various so-called “tax expenditures,” suggesting the government could assess major tax concessions for a potential reallocation of funds.
Notably, the report identified key tax concessions, with the most substantial being the main residence exemption from Capital Gains Tax (CGT) amounting to $51.5 billion. Other significant concessions include tax treatments for employer super contributions and rental deductions, totaling up to several billion dollars each. This raises questions as to whether such tax expenditures will be scrutinized more closely in light of the budget’s challenges.
Record Profits in Property Resales
Meanwhile, the property market in Australia has indicated prosperous conditions for property resellers. CoreLogic’s latest report reveals that Australians reselling properties in the September quarter made a median profit of $295,000—marking the highest figure since the mid-90s. This surge is attributed to a 0.8% growth in home values and steady demand for housing. Despite overall gains, approximately 5% of resales occurred at a loss, though this figure is the lowest since 2008.
Corporate Developments and Leadership Changes
Significant leadership changes are also unfolding, notably with the ABC (Australian Broadcasting Corporation) set to appoint Hugh Marks as its new managing director. His non-traditional ascent reflects the unique challenges he faces in leading one of Australia’s major media organizations during a period of transformation and scrutiny.
In corporate trials, Qantas has agreed to pay $120 million in compensation to 1,820 ground crew workers they illegally sacked during the pandemic, addressing perceived injustices related to employment practices during a crisis.
Economic Outlook and Investor Sentiment
The U.S. markets are also grappling with investor jitters ahead of the Federal Reserve’s policy meeting, with the Dow Jones experiencing its ninth consecutive decline. Despite strong economic indicators, including a more-than-expected increase in retail sales, uncertainty prevails as the markets anticipate the Fed’s interest rate guidance, with expectations of a 25 basis point cut. The incoming political landscape may further complicate these projections, creating a confluence of factors that investors must navigate.
As we head toward year-end, the intersection of fiscal policy discussions, corporate momentum, and international economic anxieties are critical for stakeholders to consider. The focus will remain on upcoming announcements and adjustments that could shift tendencies in the market as the New Year approaches.
