Auction clearance rates at 2022 housing downturn levels, ASX up — as it happened

That's it from us on the ABC business blog.

The last trading day for May has ended on a positive note, so I hope your weekend starts off well, too.

Our top business reporters will be back with you on the blog bright and early on Monday morning.

Until then, goodbye!

Australian shares recovered from yesterday's sell-off and have closed well up this afternoon.

The ASX200 closed up 1.6% to 8,731 points, while the broader All Ordinaries closed up 1.6% to 8,965 points.

Materials, financials and industrials were the top-performing sectors today, while energy and utilities were in the red.

In terms of individual stocks, IDP Education led the losses all afternoon, finishing up more than 16% down and dragging the "academic and educational services" sector down with it (since it's the only stock in that sector).

Champion Iron and Dexus also fell.

Lung function imaging company 4D Medical rocketed ahead today, up almost 19% on news of a US commercial deal.

Judo Capital and Vulcan Energy also pleased investors.

Meanwhile, the Aussie dollar is flat at 71.58 US cents.

Bank fees have increased by $268 million in the past financial year, to $4.1 billion, according to RBA data.

As you can see in the table below, credit card fees are costing households the most (driven by currency conversion fees), followed by home loan fees.

"This is partly a side effect of the refinancing boom, as Australians hunt for better rates," says canstar.com.au's data insights director, Sally Tindall.

"However, borrowers need to remember that while a discharge fee from your old bank is usually set in stone, the upfront fees at a new bank are often up for negotiation."

Exception fees declined by $13 million, the only fee category to fall.

"It shows that Australians are wising up to avoidable bank fines like late payment and overdraft charges," Ms Tindall says.

As I mentioned earlier, there's a 70 per cent chance the US and Iran reach a deal to reopen the Strait of Hormuz by the end of next week, according to Commonwealth Bank.

In his note to clients, CBA's geo-economist Madison Cartwright said, "a peace deal that is acceptable to Iran will likely be unacceptable to Israel".

"The current deal, as reported, will be opposed by Israel. To secure the agreement, the US will have to force Israel to accept.

"Since the prospective new deal [to reopen the Strait of Hormuz] was announced, Israel has intensified its military campaign in Lebanon.

"This is intended, in our view, to undermine the negotiations.

"While these efforts jeopardise the negotiations, they also indicate that Israel is assessing the diplomatic progress to be genuine."

Another obstacle he identified was US President Donald Trump himself.

Especially due to Mr Trump's insistence that several countries in the Gulf region, Saudi Arabia, the UAE, Qatar, Pakistan, Türkiye, Egypt, Jordan, and Bahrain, need to sign the Abraham Accords to formally recognise the State of Israel.

"Such a requirement may save some face for the US and help get buy-in from Israel," Mr Cartwright said.

"However, while some countries have already ratified the Accords (the UAE and Bahrain), the other countries will likely refuse.

"If President Trump pushes this requirement, it would likely scuttle a potential deal."

That's one of the issues addressed by Swissquote senior analyst Ipek Ozkardeskaya in her daily note today.

"US net margin debt exceeded 1.25% of US market capitalisation at the end of April, the highest level on record going back to 1997," she wrote.

"The last time US net margin debt was this high was just before the dot-com bubble burst.

"So we keep returning to the same question: Is this a bubble?

"As an economist, I will repeat that it isn't a bubble until it bursts. But a few indicators are flashing red.

"Market breadth is one of them. The equal-weighted versions of the major tech-heavy indices are lagging behind their cap-weighted counterparts, and they have good reasons to do so, including rising energy prices, higher inflation expectations, rising global yields and a deteriorating economic outlook. The gap between the Kospi and its equal-weighted version is especially worth noting.

"In the US, the Nasdaq's PE [price-to-earnings] ratio has climbed to historically uncomfortable levels. The CAPE ratio is approaching 40 — the last time that happened was during the dot-com bubble.

"And the Buffett Indicator — which measures total stock market value as a share of GDP — has surged above 230%, the highest level on record by a wide margin. For perspective, it peaked around 130% during the dot-com bubble.

"These metrics do not answer the question of whether this is a bubble, nor do they necessarily mean a crash is imminent. But they do suggest that investors are paying significantly more for each dollar of economic output than at any point in modern market history."

#ICYMI Alan Kohler's That's Business interview this week is with AI giant Anthropic's chief economist Peter McCrory.

The price of gold has plummeted after reaching record highs earlier this year.

The yellow metal hit $US5,597 an ounce in January, but has since fallen 20% to $US4,500 an ounce.

It's due to a number of forces, as explained by my colleague David Taylor in the story below:

Here's a little update on how the top and bottom performing individual stocks are going on the ASX 200 (as at 3:45pm AEST) today:

As mentioned earlier, IDP Education is down more than 16% after Macquarie downgraded its outlook to an "underperform" rating.

Mining and energy companies such as Champion Iron, Karoon Energy, Yancoal and Viva Energy are also down.

The top-performing stocks this afternoon include 4D Medical (which does lung function imaging), and it is up more than 17%.

Shares have rocketed today after it announced a new US commercial agreement.

Judo Capital Holdings and Vulcan Energy Resources are also up.

The ASX 200 is up about 1.5% in afternoon trade to 8,721 points (as at 15:30pm AEST).

The broader All Ordinaries index is also up about 1.5% to 8,955.

Financial markets appear optimistic about a tentative US-Iran deal to extend their ceasefire.

Travel stocks are up on the potential deal, while materials and banks have also lifted.

Don't be fooled by the poorly performing educational sector ... as I posted earlier, IDP Education is the worst-performing stock today and is the only stock in that sector!

The financial regulator, APRA, has announced additional licence conditions on the super fund HTFS Nominees Pty Limited (HTFS).

It relates to concerns about its investment governance, and member outcome frameworks and practices.

This includes oversight of platform investment options made available to super fund members.

HTFS acts as trustee for HUB24 Super Fund, which has about 165,000 members and more than $55 billion in funds under management.

APRA identified the following deficiencies:

• Onboarding processes and practices for new investment options
• Investment option monitoring and reporting
• Management of conflicts of interest, particularly where key decision-makers hold senior leadership positions within the parent or group, and governance arrangements lack an independent trustee voice
• Approach to member outcomes

Under the additional licence conditions imposed by APRA, HTFS is required to:

• Appoint an independent expert to undertake separate reviews of its platform investment menus and frameworks governing investment governance, conflicts management, strategic objectives and member outcomes.
• Develop and implement an uplift plan to address identified gaps, and provide APRA with assurance that remediation actions are complete and operating effectively to address those gaps.
• Undertake a further review of its investment menu against the enhanced investment governance requirements to determine the ongoing suitability of each investment option.

"This is the fifth Platform Trustee that APRA has taken enforcement action against and reflects APRA’s sustained focus on addressing prudential weaknesses identified through our review of Platform Trustees," says APRA chair John Lonsdale.

"Alongside enforcement action, APRA is closely supervising other in-scope Platform Trustees where improvement is necessary.

"APRA will continue to oversee the delivery of required actions and will hold trustees to account where they fail to make timely and sustainable improvements to investment governance and member outcomes."

IDP Education are leading the losers on the ASX200 today, down 15.4% (as at 14:30pm AEST).

So what's going on?

The Melbourne-headquartered company is an education agent that provides services for international students globally, including in Australia, the US and the UK.

And today, Macquarie downgraded the company to an "underperform" rating, leading the stock to fall as much as 20.3%.

Macquarie reckons there are tough times ahead for the company due to weaker visa volumes across some key Western countries and a stronger Australian dollar.

IELTS is the market leader to evaluate English proficiency, but there is evidence of softening demand for English education.

There's a 70 per cent likelihood the United States and Iran will strike a deal to reopen the Strait of Hormuz by June 6 (next Saturday), according to CBA's senior geo-economist Madison Cartwright.

That's based on a note Mr Cartwright sent to the bank's clients on May 27, saying there's a high probability the deal "will be finalised within 10 days".

"The political pressure and economic costs on the US and President Trump are incentivising the US to make a deal," he said.

"With no military solution available to the US, there is little incentive to restart hostilities."

Before the US and Israel waged war against Iran (in late February), 20% of the world's oil and gas was shipped through the strait.

Since then, Iran has managed to cut off access to that narrow waterway and hardly any oil and gas tankers have been able to get through, leading to the biggest oil shock in history and surging fuel prices.

This war has proved to be unpopular with Americans, who are not happy about their president's foreign intervention causing petrol prices and inflation to spike.

"However, there remains a risk that the current momentum is lost (30% confidence)," Mr Cartwright wrote.

"Under this scenario, we expect both the US and Iran will pivot away from diplomacy.

"Over the next two weeks, we expect either a deal for a new ceasefire, or the current ceasefire will have collapsed with active hostilities resuming."

As reported earlier, private capex rose 6.5% in the first quarter, driven by data centre investment.

CBA economist Lucinda Jerogin says on a state-by-state basis, the "data centre race is in full swing".

NSW has reached several major data centre project milestones recently, including the completion of the first building of Microsoft's Kemps Creek facility in Western Sydney, while CDC's Marsden Park development is in the early stages of construction.

In Victoria, CDC opened its first campus in the west of Melbourne in March, while NEXTDC also made progress on its Melbourne facilities.

CBA estimates Australia's data centre pipeline is close to $150 billion (Westpac forecasts spending to be at least $155 billion).

According to research from the Actuaries Institute, inequality between the younger and older generations is widening and could reach record levels within a few years.

While all generations are better off than they were in 2000, some of the major domains analysed by the Actuaries Institute have highlighted growing intergenerational inequity.

"There are three domains, in particular the economic and the housing and environmental, where outcomes for younger people seem to be getting worse," said Hugh Miller, one of the lead authors of the report.

"That was sort of in contrast to some of the older generations, and so we flagged that as an equity issue."

You can read more on this story here:

• ASX 200: +1.2% to 8,699 points
  
• Australian dollar: flat at 71.5 US cents
• Wall Street: Dow Jones (+0.1%), S&P 500 (+0.6%), Nasdaq (+0.9%)
• Europe: Stoxx 600 (-0.5%), DAX (-0.3%), FTSE (-0.8%)
• Asia: Nikkei (+2.1%), Hang Seng (+1%)
• Spot gold: +0.2% to $US4,498/ounce
• Oil (Brent crude): -1% to $US92.77/barrel
• Bitcoin: -0.3% to $US73,220

Prices current at around 13:55pm AEST 

Live updates on the major ASX indices:

Australia is expected to be a major beneficiary of the artificial intelligence boom.

Especially with tech giants like Microsoft and Amazon (among others) pledging to invest at least $US20 billion each to build data centres and AI infrastructure here.

"Australia is emerging as an attractive destination for global capital, supported by abundant land, growing access to renewable energy sources, and privileged access to Nvidia AI chips," according to Westpac's economics team.

"Indeed, Australia was the second-largest investment destination for data centres globally in 2024, with US$6.7 billion in capital investment, trailing only the US."

In a note to Westpac clients, its senior economist Pat Bustamante estimates Australia's data centre investment pipeline will exceed $155 billion, which is the equivalent of 5.6% of the nation's yearly economic output (or gross domestic product).

"However, heavy reliance on imported high-tech equipment means the net domestic GDP impact (allowing for import leakages) is about half of that," he added.

"This is still significant, with a net GDP boost of around $75 billion, worth 2.8% of GDP, and temporarily supporting a total of around 400,000 jobs as this investment rolls out."

The reason why Australia's economy will only receive half of the AI investment spending is because the most expensive materials need to be purchased overseas. For instance:

• The advanced AI chips will most likely come from the Taiwan Semiconductor Manufacturing Company (TSMC), as well as US tech giants Nvidia, AMD and Intel.
• Memory chips are typically sourced from South Korea (via Samsung and SK Hynix);
• Semiconductor materials from Japan.

So the money spent on those AI products will boost the GDP of those nations (ie. Taiwan, United States, Japan, South Korea, etc).

While Westpac estimates there will be 400,000 jobs created for Australians while the data centres are being built, the keyword in the quote above is "temporary".

Those jobs will disappear once those data centres have finished construction, and they'll have to look for work elsewhere.

Economic data out this week further strengthens the case for the Reserve Bank to hold interest rates at the June board meeting, says Capital Economics' Abhijit Surya.

Headline inflation fell from 4.6% to 4.2% in April, while trimmed mean inflation only edged up marginally.

"Meanwhile, there are already signs that inflationary pressures are creating strains on consumers," he said in an analyst note.

"Indeed, household spending fell by 1.1% m/m in April, with the weakness being fairly broad-based."

However, capital spending data showed private capex surged by 6.5% this quarter, driven by a boom in data-centre construction.

But the latest survey, conducted across April and May, suggests "firms are starting to pull in their horns".

"While the data will give the RBA room to pause its hiking cycle in June, there are reasons to think its job is not yet done," said Mr Surya.

"For one thing, the weakness in household spending may prove fleeting ... likewise, the pullback in firms' capex plans may be skewed by weak business sentiment.

"The upshot is that we're sticking to our view that the RBA will deliver a final 25bp hike in Q3 to guard against upside inflation risks," Mr Surya said.

GDP data will be released on Wednesday next week, and the RBA board will meet June 16-17.

Anthropic's chief executive, Dario Amodei, has previously written on his personal website that he thought artificial intelligence (AI) could replace 50% of white-collar jobs over the next five years, although he has since walked back those predictions somewhat.

When asked by Alan Kohler what he thought of his boss's views about the potential scale of AI-related job losses, Anthropic's chief economist, Peter McCrory, was far more moderate.

"That's within one of the realms of possibility, is this more disruptive scenario?" he replied.

"AI is a general-purpose technology. It is set to affect almost every occupation to some extent and every sector, and the capabilities are improving very rapidly.

"I would say so far in the data, we don't see signs that workers in roles that are most exposed to AI have had any material increase in the rates of unemployment.

"And we're putting out research that's intended to help us monitor how things develop so that we can have a real-time signal if that type of disruption ultimately materialises."

So, large-scale AI-related job losses don't appear to be happening just yet, but watch this space...

You can listen to the full interview with Alan Kohler via ABC Listen.

US President Donald Trump's face could soon feature on a new $US250 bill as part of celebrations for the country's 250th anniversary of independence.

US Treasury secretary Scott Bessent confirmed his department is prepared to design the note.

Federal laws currently prevent the printing of a living US person on currency, but Mr Bessent said "we have to be prepared" as Republicans introduce legislation in Congress that would make an exception.

Mr Bessent denied the Trump administration is behind the push, and insisted there was nothing inappropriate about it.

"There is proposed legislation in front of the House and in front of the Senate so that a living person, Donald J Trump, could be on a $250 bill. It's all up on Capitol Hill," he said.

"But we will stick to the law."

You can read more on this story here:

Hi Josh, thanks for the comment, you've really cheered me up ahead of the weekend!!!