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FIVE at FIVE AU: ASX tracks lower as minutes reveal job landscape influenced RBA

Published 22/11/2023, 04:02 pm
© Reuters.  FIVE at FIVE AU: ASX tracks lower as minutes reveal job landscape influenced RBA
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Australian shares are down a fraction today, just 4.60 points, to 7,073.60

The local bourse has lost 0.45% for the last five days but is virtually unchanged over the last year to date.

Utilities were a bright spot among the sectors, up 0.77%, with Health Care (0.32%), Energy (0.52%) and Financials (0.11%) trailing behind. Everything else was flat or down, with Real Estate (-1.45) recording late losses to join Information Technology (-1.32%) and Communications Services (-0.98%)

RBA focus on jobs

In the minutes of its November meeting, the Reserve Bank of Australia (RBA) was keen to underscore positive developments in the Australian economy, particularly in the labour market.

Governor Michele Bullock expressed optimism about the job market at a separate event on Tuesday, describing the outcome for jobs as “fabulous” and saying “I’m really optimistic we can keep these gains”.

Despite a slight increase in the jobless rate to 3.7% in October, the economy added nearly 55,000 new jobs. This figure, though partly influenced by temporary Voice Referendum-related employment, nearly tripled economists' initial predictions.

However, the meeting minutes revealed that the board was of the view that employment growth had slowed to a level roughly matching population growth.

The unexpected surge in migration had positive impacts but also introduced variations in inflation due to increased demand and supply across sectors. Notably, higher rents, growing at an annualised pace of 10%, played a role in exerting upward pressure on prices.

Consumer spending, though subdued, had received support from the anticipated resurgence in home prices in 2023, enhancing household perceptions of wealth.

Analysts think that the November interest rate hike, coupled with declining auction clearance rates as more properties enter the market, may moderate or even reverse some of the recent price surges.

Nvidia "exemplary"

Internationally, Nvidia’s big profits were still in the news.

eToro market analyst Josh Gilbert had this to say: “It was another blowout quarter from Nvidia in Q3, topping expectations across the board as the world’s most valuable chip maker met lofty expectations.

“There was simply no margin for error heading into these results, with shares gaining more than 240% year to date and expectations sky-high. But they delivered. Revenue grew by 200% year over year, while earnings jumped a massive 593%. When you’re expected to be great, you need to be exemplary, and that’s what Nvidia keeps doing.

“Importantly, guidance for the fourth quarter was also stellar at US$20 billion, well ahead of estimates of $17.2 billion.

"However, Nvidia did warn that they expect sales in China to decline significantly in Q4, coming from the US curbs on exports to China. The robust guidance, however, should overshadow this cautionary note, indicating that there is no end in sight for the AI boom just yet.

“Jensen Huang and the team at Nvidia are hitting home run after home run for investors right now. AI isn’t just Wall Street hype but, clearly, a revolutionary technology that is making Nvidia serious money.”

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