12 DEC 2022 – Monday Market Highlights – Transcript

Kate Power
Good morning, its Monday the 12 th of December and I am Kate from Milford.
Last week, the Australian GDP data print showed the economy grew by 0.6% in the third
quarter this year and 5.9% annually.
Consumptions was the key driver of economic activity with consumers reluctant
to adjust spending levels despite rising cost pressures.
Per-capita GDP growth saw the weakest increase outside of covid lockdowns this
quarter.
Employee compensation was up 3.2% in the quarter and household savings is
still above pre-covid levels.

The RBA raised the cash rate by 25 basis points this week, in line with market
expectations. This brings the cash rate to 3.1%. The RBA won’t meet until in February
next year.
Moving offshore, in the US the consumer credit report showed US consumers continue to
fund spending with credit with an increase in credit outstanding of $27bn which is in-line
with the pace of increases over previous 3 months. It shows spending is supported by
borrowing but illustrates savings levels must be close to exhaustion.
In the UK November housing data showed UK house prices are really starting to fall with
a 2.3% decline month on month.
This is the biggest monthly fall outside of the GFC going back to 1980.
However, house prices are still up year on year.
Credit card data in the UK showed spending was up 3.9% yoy in November.
Consumer confidence also ticked up, although the view of personal finances
deteriorated.

The US ISM Services print in Nov-22 was a better-than-expected at 56.5, highlighting its
resilience, and that the Fed has more work to do to curb inflation.
Finally on economic news, US annual PPI declined to 7.4% in November from 8.1% last
month as expected.
Turning to equity news
Nitro Software received another takeover bid from Potentia Capital, increasing its offer to $2
a share from $1.80.
Pathology services provider, Healius, announced the sale of its day hospital portfolio for
$138m to Nexus Hospital. The proceeds of the sale will be used to help strengthen their
balance sheet and support the group as they reset their cost base. The group has also
announced the CEO is stepping down and to be replaced by the group’s current CFO.
Air New Zealnd provided a Strong trading update last week. They upgraded their first half
2023 profit before tax guidance by 31% which was predominantly driven by yields holding
up stronger than expected and a benefit from lower fuel prices recently. However, no full
year guidance was provided.
Looking to the week ahead
We can expect the US inflation print this week which is expected to soften slightly from the
previous reading of 6.3% core CPI and 6.6% total CPI.
This will be a key input for the US federal reservice interest rate decision. The markets
expect the fed to raise rates by 50 basis points at the December meeting on Wednesday,
which is a step down from the large 75 basis point hikes at recent meetings.
Later in the week US retail sales data will be released which is expected to fall 0.1% month
on month.
Moving the UK, their CPI print will be released as well as the Bank of England interest rate
decision which is expected to increase 50 basis points to 3.5%.

In New Zealand, the third quarter GDP growth rate will be released, which is expected to
increase by 1% year on year.
And finally in Australia, look out for the unemployment rate release, last month’s reading
was 3.4% and is forecast to increase to 3.6% in December
Thank you for listening throughout the year, we hope you enjoy the holiday period ahead.