Three of the big four banks closed in the red: Commonwealth Bank dipped 1 per cent, NAB slipped 0.1 per cent, ANZ slid 0.5 per cent, while Westpac finshed 0.2 per cent higher.

The lowdown

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The Australian sharemarket finished the week 0.8 per cent higher than where it began, which AMP deputy chief economist Diana Mousina said followed Wall Street’s lead and on the expectation of sooner-than-expected RBA cuts.

“The 2024-25 federal budget was aimed at trying to lower inflation in the near term but supporting longer-term government priorities including formally launching a ‘Future Made in Australia’ (FMIA) over the medium term,” Mousina wrote.

“The Reserve Bank will likely reduce its headline inflation forecasts off the back of the cost-of-living measures, but the new fiscal stimulus will keep the RBA concerned about inflation and it will be watching to see how household spending responds to the stimulus measures.”

Meanwhile, HSBC has pushed out its forecast for when Australia will see a rate cut from the first quarter of 2025 to the second quarter.

“Our forecasts have been that consumer spending would pick up in 2H24, supported by tax cuts and an expected expansionary budget, and that this would underpin inflation.

“However, the federal budget provided even more support than we had expected, and is more front-loaded than we had anticipated. This firms up our view that core inflation will remain sticky, making it even less likely that the RBA will consider near-term rate cuts,” said HSBC chief economist Paul Bloxham.

“Although more hikes seem unlikely, a lack of further near-term tightening is likely to mean a longer period of above-neutral rates is needed. With this in mind, we push back the timing of our forecast rate cut to 2Q25 from 1Q25. We see only a shallow easing phase in 2025, with the cash rate ending that year at 3.85 per cent.

Higher for longer remains the central case – but we now expect rates to be higher for even longer.”

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RBC Capital Markets has initiated coverage on Kathmandu maker KMD Brands, with a “sector perform” rating on the stock. However, analyst Wei Weng-Chen noted the company has been impacted by the consumer spending decline, with the Kathmandu brand seeing the sharpest decline in sales.

“Overall, KMD operates in a highly competitive category and to become more constructive, we would require more confidence in the company’s ability to arrest its sales and market share declines,” Weng-Chen wrote in a note to clients. The stock closed down 1.3 per cent.

Overnight, the Dow slipped 0.1 per cent. The S&P 500 index, which is much more widely followed on Wall Street, dipped 0.2 per cent and the Nasdaq composite fell 0.3 per cent, to 16,698.32. All three indexes had rallied on Wednesday to all-time highs.

Stronger-than-expected profit reports have been one of the main reasons US stock indexes have broadly jumped through May to records after a tough April. Another has been revived hopes that the Federal Reserve will be able to cut its main interest rate at least once this year. The Fed has been keeping its federal funds rate at the highest level in more than two decades.

Yields rose Thursday after some mixed data on the economy, including the report that hurt homebuilder stocks, which showed the industry broke ground on fewer projects than expected.

Tweet of the day

Quote of the day

“We have been equally clear that we expect the next chair of the company to be an external appointment with strong Australian property sector expertise.

Our firm is always open to board involvement in all our portfolio companies, as we believe we bring a much-needed ownership mindset that is all too often missing in Australian boardrooms.”

That’s a statement from Tanarra Capital, part of a bunch of dissenting investors calling for a shake-up of Lendlease’s complicated empire.

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