The ASX was higher today led by miners.
The S&P/ASX200 was up 24.20 points or 0.33% to 7,253.30. Over the last five days, the index has gained 1.00% but is down 2.57% for the last year to date.
Top-performing stocks in this index are Fisher & Paykel Healthcare Corp and Rio Tinto Ltd (ASX:RIO), up 9.84% and 3.53% respectively.
Iron ore miners also had a good run today after iron ore hit $100 for the first time since September. BHP (ASX:BHP) Group was 2.19% higher, while Fortescue Metals Group (ASX:ASX:FMG) gained 2.21%.
Looking at the sectors, Materials was in the green to the tune of 1.68%, followed by Health Care at 0.56% higher. On the downside were Real Estate and Consumer Discretionary losing 0.82% and 0.48% respectively.
What is making news today
House price recovery predicted; consumer confidence lifts
The ANZ believes house prices will fall by as much as 20% by mid-2023, but recovery will soon follow.
ANZ senior economist Adelaide Timbrell says a 5% recovery in 2024 is likely and house prices have fallen due to reduced borrowing capacity not forced sales.
"Arrears rates are coming from a very low base, households have built-up large liquidity buffers and the rise in the share of loans in negative equity is expected to be modest," Timbrell says.
There will be no sharp lift in forced sales either.
"A sharp lift in forced sales is unlikely in our view, given very large savings buffers," Timbrell said.
"There’s no doubt that arrears rates will rise over time, as interest rates go higher and the labour market softens, but we expect the rise to be contained, particularly given that we are expecting unemployment to remain low by historical standards."
The ANZ has also reported a jump in consumer confidence by 2% as we head into Christmas.
The ANZ-Roy Morgan Consumer Confidence rose 1.8% to a reading of 83.1, above the four-week average of 81.1. This is still well below the monthly average since 1990 of 111.9.
The lift came with an upswing in sales for Black Friday.
"The drop-in October retail sales suggests weak confidence may finally be impacting household spending. But changing seasonal patterns may explain some of the softness," ANZ head of Australian economics David Plank said.
"ANZ-observed spending data from last week will provide an insight into whether consumers held back in October to spend big on Black Friday sales."
Lithium price to fall
US bank Morgan Stanley (NYSE:NYSE:MS) says a lithium price correction is coming as "headwinds to demand growth allow supply to catch up".
While China's lithium demand growth was strong in 2022 and EV (electric vehicles) sales were up 90% year to date, China's EV penetration is already more than 20% and subsidies will be partially phased out. This will lead to slowing demand growth in 2023.
An overproduction of batteries is also an issue.
"A breather to lithium's surging demand growth, amidst continued supply expansion, will reduce the 90,000-tonne LCE (Lithium Carbonate Equivalent) market deficit in 2022 to just 15,000 tonnes in 2023, we estimate."
"This dynamic is likely to weigh on prices; we see a China carbonate price of $67.5k/t in 1H23 and $47.5k/t in 2H23, with the latter implying 35% downside versus spot," the bank stated.
Longer-term supply growth challenges are also afoot, with greenfields projects difficult to ramp up due to new or unproven extraction techniques, inexperienced new entrants or junior miners, issues in launching lithium supply in new jurisdictions and community push-back/permitting challenges.
"Once potential supply is risk-adjusted, a longer-term shortfall emerges, rather than an oversupplied market if we were not to make such an adjustment.," the bank said.
Morgan Stanley predicts a 22% shortfall by 2030.
Christmas spending to light up
A Savvy survey predicts Australians will spend $149 billion on Christmas day alone.
The survey predicts:
- Australians will spend up to $14.9 billion this Christmas;
- this Christmas, the average Aussie will spend $767;
- the average woman will spend $848 at Christmas, in contrast to the average male spend of $705; and
- 76% of shoppers plan to primarily fund their spending with their savings.
Those in the 35 to 54-year age bracket are set to be the biggest spenders, with 27% of 35 to 44-year-olds and 25% of 45 to 54-year-olds planning to spend more than $1,000. In comparison, only 16% of 25 to 34-year-olds and 11% of 18 to 24-year-olds are looking to splash that amount.
Most Australians will be primarily funding their Christmas spending with their savings, with 76% stating they would be utilising their own money to do so.
However, the number of Australians who plan to use either a credit card or buy now, pay later (BNPL) service as a main source of funding for their Christmas shopping has increased, with credit cards rising from 16% to 28% and BNPL from 6% to 17%.
How will rising living expenses and inflation impact the festive season?
This Christmas comes against the backdrop of rapid inflation and rising cost of living, which is the main reason many families are spending less this festive season.
As reported in Savvy’s Black Friday shopping survey, 67% of Australians stated that the current financial situation in Australia would either negatively or significantly negatively impact their holiday period.
Savvy spokesperson Adrian Edlington said, “Our survey shows that Australians are still keen to spend over the Christmas season, with the average spend of over $750 per person potentially leading to almost $15 billion being invested back into our economy.
“Although this year has been difficult for many families around the country, Christmas remains a time of hope and optimism, so it’s heartening to see that people will still be able to buy presents for their friends and family and travel across the end of the year.
“Most Australians are still using their savings but more are now turning to credit cards and BNPL services. It’s important to avoid taking out too much credit over Christmas, as avoiding excessive and unmanageable debts will significantly reduce your chances of experiencing January stress.”
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