Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
Xero 1H25 results
As tech continues to soar, locally and overseas, Xero Inc (ASX:XRO). isn’t being left behind. Shares recently hit a record high ahead of this week's first-half results.
Profit could rise by as much as 50% after reaching profitability again in 2024. Solid revenue growth from rising prices alongside slowing costs from a reduced headcount has helped drive earnings higher.
The focus for investors, though, will likely be growth in overseas markets. The business has solidified itself in Australia as a leader but shareholders will be looking for ongoing penetration internationally to capture more share of the digital accountancy market.
CEO Sukhinder Singh Cassidy has said her focus is still on the US, and given that she only joined in November 2022, strategy shifts can take a few years to bear fruit.
The market consensus is for revenue to grow by 24% year-over-year to NZ$914 million with net income set to come in at NZ$123 million. Subscriber numbers will be in the spotlight and the expectation is for total subscribers to reach 4.31 million.
US inflation
Donald Trump's return to the White House could bring inflation back into the spotlight and lead to a more hawkish Federal Reserve down the line.
Of course, the Fed is data-dependent and won’t be swayed in the short term by future policies. Jerome Powell was appointed to Fed chair by Trump during his first presidential term but the two often came to loggerheads in the ensuing years.
When delivering the latest 25 basis points rate cut last week, Powell asserted that he would not consider resigning if asked to by Trump, who does not have the executive power to boot the central bank head directly.
As we’ve seen before, though, one of Trump’s strengths is applying pressure on opponents through non-conventional means – particularly his social media – so further disagreements between the pair could lead to difficult conditions for Powell as he continues to wrangle inflation.
Further, services inflation is closely tied to wage growth. President Trump's pledge to crack down on immigration and deport millions from the US, at a time of already low unemployment, could shock the labour market, especially in industries such as construction and agriculture that are already seeing shortages.
Expectations are for headline Consumer Price Index (CPI) to rise to 2.6% from 2.4% the month prior, while core inflation is set to rise to 3.3% year-over-year for the third straight month.
AU jobs
Australia’s labour market report for October is likely to show a slowdown in job growth, following a recent run of stronger-than-expected employment gains.
The unemployment rate is currently within the Reserve Bank of Australia’s (RBA) target range for taming inflation, but it will be difficult to keep it steady while waiting for other key metrics to fall into line.
Analysts estimate that there will need to be 19,000 new jobs created monthly to keep the jobless rate in a good position. With weak economic growth a concern – as well as the threat of economic instability in the wake of the US election – this may be a tall order.
Job ads, largely a solid non-government indicator of employment conditions, have been on the decline, further supporting the outlook that the job market is shrinking.
It’s likely that this month’s data drop will show an increase in jobs of just 15,000 following a bumper September and recent strong growth overall.
Unemployment is slated to continue climbing through to the end of the year, likely dragging into 2025. The unemployment rate is set to rise to 4.2% this week.