China's economy has 'lost momentum', gold miners drag ASX lower — as it happened

Sorry for the delay in the market close post, I had to moonlight on ABC Radio Sydney to talk to Richard Glover about the day in finance.

As I said to his listeners, the big moves down were in energy, real estate and mining — in particular gold mining.

Evolution Mining had a production update, which clearly didn't go down well with investors, and slumped 17.3% to $3.10, but even the biggest gold player listed on the ASX, global giant Newmont (which recently bought out Australia's Newcrest), dropped 5.1% to $53.38.

Energy was the weakest sector, down 1.1%, as crude oil prices eased and the US dollar strengthened.

Woodside (-1.4%), Santos (-0.8%) and Whitehaven Coal (-2.1%) were among those in the red.

The whole real estate sector was also on the nose, with GPT Group (-2.2%) and Lend Lease (-1.8%) leading the falls.

With the US dollar on the up, China's GDP data mildly disappointing and commodities down, the Aussie dollar eased to 65.57 US cents by 4:45pm AEDT.

And that's it for today.

NAB has fallen in line with its big four counterparts, and now expects the Reserve Bank to keep the cash rate on hold when it meets early next month.

The RBA's meeting on Tuesday February 6 will be the first time it holds a press conference an hour after its decision is released.

It will also be one of only eight meetings next year, down from 11 previously.

RateCity says all big four banks expect rate cuts by the end of this year, with CBA tipping three from September, Westpac two from August, NAB one in November and ANZ one sometime in the final three months of the year.

But RateCity's research director Sally Tindall says customers shouldn't rely on a rate cut to bail them out if they're in financial distress.

"The RBA hasn't yet ruled out the possibility of another hike so Australians shouldn't either," she said.

"At this stage, another hike is looking increasingly unlikely, on the back of better than expected inflation figures, however, borrowers should make sure there's room in the tank for one more, just to be on the safe side.

"While the cash rate is likely to go down at some point, if you've got a mortgage, don't bank on this happening in 2024."

While most of the world has had a bad case of inflation for the past couple of years, China has headed in the other direction.

ANZ's chief economist for Greater China Raymond Yeung and its senior China strategist Zhaopeng Xing, say today's GDP numbers highlight the extent of this deflation.

"Nominal GDP growth in Q4 was lower than expected and has grown 3.7%," they wrote. Bear in mind the "real", or inflation adjusted, GDP figure was 5.2%, so that's a big difference.

"The GDP deflator is negative. Our long-held view is that price is a better indicator of China's business cycle than quantity. The output gap remains negative."

They believe China's economic growth will only truly stabilise once its property downturn is over.

"China's economic recovery will mainly depend on the timing of property recovery," they argued.

"Property investment contracted 9.6% in December2023. The timeline of property market stabilisation remains uncertain.

"We are still cautious on China's growth outlook and forecast GDP growth of 4.2% in 2024."

Unsurprisingly, China's economy grew at 5.2% for the year to December 2023, as flagged by Premier Li Qiang ahead of the official data release.

Quarterly GDP growth slowed from 1.5 to 1%, although annual growth rose from 4.9 to 5.2% as a weak December quarter in 2022 hit by COVID disruptions dropped out of the annual figure.

"China's economy lost momentum in Q4 according to the official GDP figures. But we suspect that's because they failed to acknowledge the full extent of the weakness earlier in the year," wrote Julian Evans-Pritchard, the head of China economics at Capital Economics.

"In seasonally-adjusted q/q terms, growth dropped back from an upwardly revised 1.5% to 1.0% (4.1% annualised).

"We are sceptical that growth was anywhere near 1.5% q/q in Q3, however. Our in-house alternative to official GDP, the China Activity Proxy, suggests that there was an outright contraction in Q3, with the economy returning to growth more recently."

However, Mr Evans-Pritchard said the recent "slight improvement in momentum" may be very short-lived.

"But the recovery clearly remains shaky. And while we still anticipate some near-term boost from policy easing, this is unlikely to prevent a renewed slowdown later this year," he continued.

"Although the government met its 2023 GDP growth target of 'around 5.0%', achieving the same pace of expansion in 2024 will prove a lot more challenging."

The Housing Industry Association (HIA) says the latest ABS building activity data for the September quarter 2023 show how far Australia is behind the federal government's target of building 1.2 million homes over the next five years.

"Australia commenced construction of just 23,058 new houses in the September Quarter 2023, the weakest quarter in over a decade and down by 21.6 per cent on the same quarter last year," noted HIA senior economist Tom Devitt.

"This data reveals there were 103,707 detached houses that commenced construction in the twelve months to September 2023, down by 17.0 per cent on the 124,940 commenced in the previous twelve-month period.

"This points to a slow start to National Cabinet's ambition to build 1.2 million homes over the next five years starting mid-2024."

Mr Devitt says pointed to interest rates — along with government planning red tape, skills shortages and a lack of infrastructure — as the main reasons why housing construction is so weak.

"Since the RBA's first cash rate increase in May 2022, sales of new homes have tumbled," he wrote.

"A number of earlier projects are also being cancelled, with banks withdrawing finance in the face of soaring building costs and shrinking homebuyer borrowing power.

"This lack of new work entering the construction pipeline is expected to produce a trough in new house commencements in 2024, when Australia will start construction on just 95,400 new houses, the weakest year in over a decade.

"There was also a decline in the number of multi-unit projects commencing construction, down by 9.6 per cent in the September Quarter 2023 to just 13,916, one of the weakest quarters in over a decade.

"Multi-unit commencements are mounting a recovery on the back of population growth and land constraints, with Australia expected to commence 84,400 new multi-units in 2024.

"This would still put total detached and multi-unit commencements at less than 180,000 in 2024, far below the 240,000 per annum required to meet National Cabinet's target."

• ASX 200: -0.2% to 7,401 points (live values below)
• Australian dollar: +0.1% to 65.89 US cents
• Nikkei: +1.3% to 36,081 points
• S&P 500: -0.3% to 4,766 points 
• Nasdaq: -0.2% at 14,944 points 
• FTSE: -0.5% to 7,558 points
• EuroStoxx: -0.2% to 473 points
• Spot gold: Flat at $US2,028/ounce
• Brent crude: -0.6% to $US77.84/barrel
• Iron ore: +0.9% to $US128.60/tonne
• Bitcoin: -0.6% to $US43,172

Prices current around 12:25pm AEDT

Live updates on the major ASX indices:

Good afternoon, I'll be piloting your markets blog for the rest of the day.

The Australian share market is down modestly around midday, while the basic materials (mainly mining) sector is flat.

But that flatness masks a divergence between solid gains for the big three iron ore miners and some fairly steep losses elsewhere in the resources sector.

BHP (+0.8%), Rio Tinto (+1%) and Fortescue (+1.3%) all rebounded after a sell down yesterday.

But most other resources firms are in the red, some quite deeply so, especially in the gold sector.

Most of the major energy players are also lower, such as Woodside (-1.6%), Santos (-1.3%) and Whitehaven Coal (-1.5%), with energy the worst performing sector after education.

The big four banks are split between two modest gains (ANZ and NAB) and two modest falls (CBA and Westpac).

Out of the top 200 companies, 121 are lower and 72 higher.

Overall, the ASX 200 is off 0.2% to 7,398 points.

ASX 200: -0.9% to 7,409 points 

Australian dollar: flat at 66 US cents

Dow Jones: -0.6% to 37,361 points

S&P 500: -0.3% to 4,765 points

Nasdaq: -0.2% at 14,944 points

FTSE: -0.5% to 7,558 points

Spot gold: -0.4% at $US2,026/ounce

Brent crude: $US78.29/barrel

Bitcoin (AUD): -0.8% at $US65,361

Chinese Premier Li Qiang says the country's economy is expected to have grown by around 5.2 per cent in 2023.

He told the World Economic Forum's annual meeting of top global business and political leaders in Davos, Switzerland that "in the past year of 2023, China's economy has generally rebounded and improved".

Today, the Chinese government is set to announce its annual GDP figures for last year.

While this expansion would mark a significant pick-up since 2022, when China's economy grew by just 3 per cent, it is still one of the country's worst economic performances in more than three decades.

The premier is the most senior Chinese leader to attend the Davos forum in person since President Xi Jinping in 2017.

He tried to reassure international investors that "investing in the Chinese market is not a risk but an opportunity".

"No matter how the world situation changes, China will adhere to its basic national policy of opening up to the outside world," Li said.

During the pandemic, China's growth was disrupted by strict lockdowns, but still, 5.2 per cent would be the country's slowest pace of annual growth since 1990.

That was when the economy expanded by just 3.9 per cent because of international sanctions following the 1989 Tiananmen Square massacre.

The country has been beset by a series of economic problems, including a real estate crisis, record youth unemployment, deflation, and a rapidly ageing population.

International economists have forecast China's growth to slow to about 4.5 per cent this year.

- with AFP

Australian shares slipped at the open, tracking selling on Wall Street after US Federal Reserve policymaker Christopher Waller pushed back on rate cut bets.

The benchmark S&P/ASX 200 index fell 0.1 per cent, or 6.9 points, to 7407.9 at the start of trade.

The S&P 500 dropped 0.4 per cent, the tech-focused Nasdaq slipped 0.2 per cent, while the Dow Jones fell 0.6 per cent.

The $A slumped as much as 1.2 per cent, falling below US66 cents overnight.

The rising frequency of Iran-backed Houthi attacks on commercial ships in the Red Sea will further reduce shipping traffic through the Suez Canal, causing delays in goods arriving from Europe and pushing up insurance premiums.

Houthi militants attacked a second commercial ship in the Red Sea in under 24 hours.

Shell responded to the attack by halting all oil tanker transits through the waterway, joining other ship owners and operators in halting transit through the Red Sea.

CBA analyst Vivek Dhar says ship tracking data from Bloomberg shows that ship traffic passing through the southern Red Sea has dropped to 114 vessels – down 13 per cent from last week, 59 per cent from last month and 55 per cent from six months ago.

"The 114 ships currently transiting through the southern Red Sea are carrying mostly bulk and oil cargoes," he said in a research note.

The militants vowed a "big response" to UK and US airstrikes on Houthi targets in Yemen last week.

"It's likely that the number of vessels through the Red Sea will fall even lower in the wake of these recent attacks," Mr Dhar said.

"Reduced shipping traffic through the Red Sea effectively means reduced traffic through the Suez Canal, which connects Asia and Europe.

"The bad news is that the alternative route around Africa takes 14 days longer (from Singapore to Rotterdam) and is more costly.

"Ships willing to take the risk and transport cargoes via the Suez Canal and Red Sea face heftier insurance costs now as well. Insurance costs have increased tenfold from just a few weeks ago.

"So, while oil benchmarks may not reflect the Red Sea attacks, the realised price for oil and oil products for consumers has increased given the disruption to trade flows through the Red Sea and Suez Canal."

Read more about the shipping disruptions in this explainer I wrote:

Would you call Woolworths' Australia's "most valuable" brand and Bunning's Australia's "strongest" brand?

According to Brand Finance's Australia 100 2024 report, which ranks the 100 "most valuable" and "strongest brands" in the nation, the total value of Australia's top 100 brands has risen by 2.5 per cent to reach $199 billion, with 60 of the brands in the rankings seeing an increase in brand value.

It said 36 brands posted declines while four new brands entered the rankings.

The data defines "brand value" as the "net economic benefit that a brand owner would achieve by licensing the brand in the open market".

It defines "brand strength" as "the efficacy of a brand's performance on intangible measures relative to its competitors".

It is based on research data from more than 150,000 respondents in 38 countries and across 31 sectors.

Woolworths defended it most valuable brand crown despite a 5 per cent brand value decline to $15.4 billion (the survey was taken before the Australian Day saga with Woolworths and Big W have choosing not to stock Australia Day merchandise this year due to a "gradual decline in community demand".).

The other top Australian brands, according to the data, were Telstra (brand value down 1 per cent $13 billion) and Commonwealth Bank (brand value down 7 per cent to $10.6 billion).

Coles, held its position as the fourth most valuable brand, saw a 9 per cent decrease in brand value to $9.8 billion.

Despite a brand value decrease of 7 per cent to $2.8 billion following a spate of reputational issues at the airline, Qantas climbed a spot to become the nation's 17th most valuable brand on the back of increased revenue and forecasts.

Bunnings (brand value jumped 20 per cent to $6.5 billion) making Australia's strongest brand for the third year running, with a Brand Strength Index score of 88.2 out of 100. It saw an increase in store sales by 3.7 per cent, with store-on-store sales growing by 1.8 per cent.

Managing director of Brand Finance Australia, Mark Crowe, noted the retail sector was hurt by inflation in 2023 which led to a reduced growth rate.

But he said it remains the most valuable sector in the data rankings with an aggregate brand value of $46.5 billion, which accounts for 23 per cent of the total value of Australia's top 100 brands.

He noted the Australian economy managed to avoid a recession in 2023, but real retail spending experienced a decline for three consecutive quarters due to consumers tightening their discretionary purchases amid rising living costs.

This, he said, impacted brands such as Woolworths, Coles and Bunnings.

Compared to the RBA’s latest economic forecasts, Betashares chief economist, David Bassanese predicts the coming year will see stronger economic growth, lower inflation, and a "modest lift" in the unemployment rate.

He suggests the RBA will cut rates by 0.6 per cent, more than the market currently expects.

"A lower-than-expected inflation path and increase in unemployment will allow the RBA to cut interest rates in 2024, with my base case being cuts at the August and November policy meetings," he writes in an economic note.

"The first move in August is expected to a larger 0.35 per cent cut to 4 per cent (bringing the cash rate back to quarter percentage point levels), with one further 0.25 per cent cut in November."

He notes that disinflation trends we are seeing in the global goods sector will increasingly filter through to Australia, while service sector price increases will also slow as cost pressures ease.

"Lower inflation will, in turn, help boost real household incomes, while along with RBA rates cuts will support a send half rebound in consumer spending," he says.

"A soft landing for the global economy will also help."

He forecasts the economy will grow by 2.25 per cent over the year to end-2024 (RBA 2 per cent), but that the unemployment rate will still edge higher to 4.25 per cent in line with RBA expectations.

"Perhaps the biggest difference, annual trimmed mean inflation is expected to end the year within the target band at 2.75 per cent (RBA 3.25 per cent) – more than a year earlier than RBA expects.

While RBA rate cuts should support house prices, "an easing in immigrations flows, lift in unemployment and already poor affordability should constrain further house price gains in 2024".

"National house prices are expected decline by 3 per cent next year after a 10 per cent rise in 2023," he said.

Mr Bassanese says the Aussie dollar will rise to $US75cents, and that US$80c is in sight by mid-2025.

"Despite RBA rate cuts, the Australian dollar should also strengthen, reflecting earlier and more aggressive US interest rate cuts and an improving global economic outlook in the second half of the year which will reduce the safe haven demand for the US dollar," he says.

Firmer global growth in the latter half of the year, especially a strengthening in the Chinese economy, is expected to result in further ion-ore price gains to $US 150/tonne.

While the S&P/ASX 200 will, he says, reach 8,000 by year end

"Although the Australian corporate earnings have been going through a soft patch due to a weakened consumer and easing commodity prices, forward earnings should start to recover this year as they begin to factor in the earnings recovery expected in FY’25 and FY’26," he says.

Elon Musk wants a bigger stake in Tesla, saying he's not comfortable with the company becoming market leader in AI and robotics without at least 25 per cent voting control.

The Tesla chief executive and world's richest man, currently owns about 13 per cent of the company.

Mr Musk sold a large chunk of his shares in the electric car company less than two years ago to buy the social media platform Twitter, now called X.

He claims the current structure makes Tesla vulnerable to a "takeover by dubious interests" and he wants more control over its direction.

Mr Musk said in a social media post that that he was particularly concerned about Tesla's investments in artificial intelligence features.

"I am uncomfortable growing Tesla to be a leader in AI and robotics without having 25 per cent voting control," he wrote in an X post.

"Enough to be influential but not so much that I can't be overturned.

"Unless that is the case, I would prefer to build products outside of Tesla."

Tesla's shares fell about 2 per cent in pre-market trading on Tuesday, following Musk's comments.

Could the current row between the Dubai-owned stevedore, DP World, and the Maritime Union of Australia, see a repeat of the 1998 waterfront dispute?

Could it reignite inflation and cause the Reserve Bank to continue lifting interest rates?

These are questions that are being pondered because of disruptions at DP World's port terminals in Sydney, Melbourne, Brisbane and Fremantle.

Read more on it in my story today here:

ASX 200: 7,415 points (at Tuesday close)

Australian dollar: -1.1% to 66 US cents

Dow Jones: -0.8% to 37,279 points

S&P 500: -0.5% to 4,756 points

Nasdaq: -0.3% at 14,918 points

FTSE: -0.5% to 7,558 points

Spot gold: -1.26% at $US2,028.6/ounce

Brent crude: -0.2% $US77.99/barrel

Bitcoin (AUD): +2.18% at $US65,444

Live updates on the major ASX indices:

Morning and welcome to the blog.

Australian shares may have a slower start, with futures reversing overnight gains amid selling on Wall Street overnight after Federal Reserve policymaker Christopher Waller pushed back on rate cut bets.

He said continued declines in inflation would allow the central bank to lower interest rates this year but that the process should be "carefully calibrated and not rushed".

On Wall Street, the Dow Jones Industrial Average is down 0.8 per cent, the S&P 500 index dropped 0.5 per cent and the tech-focused Nasdaq is 0.4 per cent lower.

The Australian dollar fell to US65 cents.