分类： business

On a volatile trading session for Australia’s equity markets, two separate events combined to push benchmark indexes lower: a sharp selloff in the healthcare sector driven by a major biotech firm’s impairment announcement, and a sudden jump in global oil prices triggered by a social media post from former US President Donald Trump derailing hopes of a Middle East peace breakthrough.

The benchmark ASX 200 closed 42.60 points, or 0.49%, lower at 8701.80, while the broader All Ordinaries index retreated 38.10 points, or 0.42%, to settle at 8942.40. Eight of the 11 tracked market sectors finished the day in negative territory, with only the energy and mining sectors bucking the downward trend. The Australian dollar edged slightly higher, gaining 0.08% to trade at 72.38 US cents by market close.

The single biggest drag on the market came from the healthcare sector, which plummeted 6.47% overall following a major announcement from CSL, the sector’s largest Australian-listed heavyweight. The global biotech firm revealed in a 90-day operational review that it would record an additional $US5 billion ($A6.9 billion) in non-cash impairment, on top of the $US1.5 billion impairment it already recognized during its first-half financial results. The news sent CSL shares tumbling 15.96% to $100.75, marking one of the worst single-day trading performances in the company’s history and pushing the stock to a near nine-year low. Other healthcare stocks also felt the spillover: Sigma Healthcare slid 0.35% to $2.84, and New Zealand-based medical device manufacturer Fisher & Paykel dropped 0.21% to $28.94.

Adding further downward pressure on Australian equities was a sudden surge in global crude oil prices, sparked by a post on Donald Trump’s Truth Social platform that rejected a proposed peace framework with Iran. In the post, Trump wrote, “I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it – TOTALLY UNACCEPTABLE.” The blunt dismissal of progress in negotiations immediately roiled energy markets, where pricing has long been highly sensitive to geopolitical instability in major oil-producing Middle Eastern regions. By the close of global trading, Brent Crude surged 3.9% to settle at $US105 ($A145) per barrel, while U.S. benchmark West Texas Intermediate climbed 4.6% to hit $US99.78 ($A138) per barrel.

Josh Gilbert, lead APAC analyst for global investment platform eToro, explained that oil volatility will remain tied directly to diplomatic developments in the region for the foreseeable future. “The core issue is still firmly on the table, which is that the Strait of Hormuz remains largely closed, and every failed negotiation is a reminder that there is no quick fix to the biggest supply disruption in history,” Gilbert noted. “We continue to see strong swings in the oil price, and that’s unlikely to change in the near term.”

Against the broader market downturn, a handful of sectors posted solid gains. Australia’s largest iron ore miners outperformed, even amid the oil price shock: BHP closed 0.66% higher at $58.33, Rio Tinto gained 0.60% to $179.79, and Fortescue Metals rose 0.71% to $21.42. The energy sector also closed in positive territory, led by a rally among Australian uranium producers: Paladin Energy jumped 5.76% to $13.21, Deep Yellow gained 4.62% to $1.81, and Boss Energy climbed 6.47% to $1.48.

Several individual companies posted strong gains on the back of positive corporate announcements. Metcash, a leading Australian wholesaler of food, liquor and hardware, surged 6.57% to $2.92 after it upgraded its full-year underlying net profit after tax guidance to a range of $268 million to $270 million. Out-of-home advertising firm oOh!media also rallied 7.1% to $1.35 after confirming it had received an unsolicited takeover proposal from U.S.-based infrastructure investment firm I Squared Capital. Among banking stocks, ANZ fell 0.17% to $35.90 as the lender went ex-dividend for its partially franked interim dividend of 83 cents per share, which will be paid out to registered shareholders in the coming weeks.

Ahead of next week’s highly anticipated Australian federal budget, new analysis from Oxford Economics Australia has projected a far stronger fiscal position than earlier forecasts, driven by sky-high commodity prices and persistent inflation that are simultaneously squeezing household budgets across the country.

The independent research firm estimates the federal budget for the current financial year will come in $11.4 billion ahead of previous projections, with cumulative upgrades to the bottom line reaching $71 billion over the next four years, all tied to the recent global surge in energy and raw material costs. Harry Murphy Cruise, Oxford Economics Australia’s head of economic research and global trade, explained that the cost-of-living crisis battering household budgets is delivering an unexpected short-term boost to national government coffers.

“All of the pressures that are hurting household bottom lines actually work in the federal budget’s favor in many respects,” Murphy Cruise told NewsWire. “Higher inflation and elevated commodity prices both push up total tax revenue, which is why we’re seeing such a large improvement to this year’s budget balance.”

Much of this unexpected windfall traces back to the volatility in global oil markets triggered by escalating Middle East tensions between the U.S. and Iran that began in late February. Brent crude prices climbed from roughly $56 USD per barrel in January to a temporary peak of $120 USD, before settling around $100 USD in recent weeks. For every $10 USD rise in oil prices, Australian motorists pay an extra 10 cents per liter at the fuel pump, which has directly driven up overall inflation: the national consumer price index jumped to 4.6% in March, up from 3.4% in February.

Beyond oil, key export commodity iron ore has also traded well above forecast levels this year. The higher commodity prices lift federal revenue through three key channels: increased royalty payments to the government, higher corporate profit tax from mining firms, and increased consumption tax and GST revenue from higher overall prices for goods and services across the economy. As of May 8, Australian gross national debt stood at $964.2 billion, with net debt (calculated as gross debt minus government cash holdings, investments and loans) at $587.5 billion according to the most recent Mid-Year Economic and Fiscal Outlook. Even with the massive projected upgrades to the budget, Oxford Economics notes no consistent surpluses are expected over the next four years, and the revenue boost is only a temporary gain rather than a long-term improvement to the nation’s fiscal position.

The short-term fiscal gain comes at a steep cost for broader economic growth, new projections from the Reserve Bank of Australia (RBA) show. The central bank has downgraded its 2026 GDP growth forecast by 0.5 percentage points to just 1.3%, and lifted its 2024 headline inflation projection to 4% from the earlier 3.6% forecast. RBA governor Michele Bullock warned that the ongoing conflict in the Middle East has created significant new uncertainty for the Australian and global economies, with two adverse scenarios modeled by the RBA showing just how severe the fallout could be.

In both downside scenarios, prolonged tensions keep the critical Strait of Hormuz — through which roughly 20% of global oil supplies pass — closed, triggering a sharp near-term spike in global energy prices. Under these conditions, underlying inflation could peak as high as 5.2%, and the unemployment rate would rise to 5.1% as economic activity stalls. Even in these worst-case scenarios, the RBA does not project a technical recession, and still expects inflation to return to its 2-3% target range by June 2027. Bullock emphasized that the commodity price shock stemming from the conflict has worsened the already difficult trade-off between taming inflation and supporting growth. “Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios the conflict adds to global and domestic inflation,” Bullock said. “The shock to oil and some other commodity prices has worsened the trade-off between inflation and growth.”

With the budget set to deliver better-than-expected revenues, leading economists are urging the federal government to avoid broad-based cash handouts to ease household cost-of-living pressures, warning that excessive spending would only add to inflation and force the RBA to keep interest rates higher for longer. AMP chief economist Shane Oliver is calling for deep, targeted spending cuts to get the budget back on track, capping any new cost-of-living relief at $5 billion, or roughly 0.2% of national GDP. Oliver argues the government needs to find $100 billion in cumulative savings over the next four years to bring government spending back to its long-term average of around 25% of GDP, down from the current 26.9%.

“My wishlist is that any stimulus from the government is limited, well-targeted towards businesses and households that need it most, and also temporary and modest,” Oliver said. “If you pump too much stimulus in, you’re just going to make the Reserve Bank’s inflation challenge worse and lead to even higher interest rates. It might sound harsh, but the problem is all this extra government spending has increased aggregate demand in the economy, crowded out home construction, business investment and consumer spending, and created an inflation problem that didn’t need to exist.”

Australian healthcare multinational CSL has endured another severe market setback, with its share price plummeting 20.29% at market open to hit a 10-year low Monday, after the biotech giant disclosed a fresh $5 billion non-cash impairment write-down as part of a 90-day strategic review. The sharp drop pushed CSL’s share price below the $100 threshold for the first time since 2014, a dramatic fall from the company’s peak valuation of roughly $340 per share recorded at the height of the COVID-19 pandemic, when CSL saw explosive revenue growth driven by global vaccine rollouts.

Of the $5 billion total impairment, $1.5 billion was already accounted for in CSL’s first-half financial results, with the remaining charge reflecting underperformance across key international market segments. The company confirmed an additional $300 million write-down tied to its U.S.-based immunoglobulin business, while its albumin operations in China will take a $200 million hit from ongoing market headwinds. Weaker-than-projected revenue across these overseas segments weighed heavily on investor sentiment, leading to the historic single-day sell-off.

Despite the markdown, CSL reaffirmed its full-year financial projections, forecasting total annual revenue of roughly $21 billion Australian dollars and net profit of $3.1 billion Australian dollars, a modest downward revision from earlier estimates of $3.3 billion Australian dollars. The downgrade was announced by interim chief executive Gordon Naylor, who stepped into the top role just three months ago after former CEO Paul McKenzie’s abrupt departure earlier this year.

Naylor sought to reassure stakeholders Monday, noting that while the company’s long-term growth initiatives are progressing, their financial benefits will take longer to materialize than initial forecasts projected. As a result, CSL has revised downward its financial guidance through the 2026 fiscal year. The Monday announcement marks the second major market shock for CSL in just four months: back in August, the company lost $21 billion in market capitalization in a single trading session after unveiling a sweeping corporate restructuring plan. That restructuring includes cutting 3,000 global roles — an upfront cost of $770 million that is projected to generate annual savings of $500 million to $550 million over three years — as well as plans to spin off its influenza vaccine division Seqirus into an independent ASX-listed company by 2026. CSL will also merge the commercial and medical operations of its core blood plasma and iron deficiency treatment businesses into a single unified unit to streamline operations.

As a major exporter of plasma-derived life-saving therapies to the United States, CSL also addressed growing concerns over new U.S. tariffs on pharmaceutical products in its announcement. The company confirmed it does not expect any material impact from the tariffs, as the life-saving therapies it produces are set to be exempt from the new trade measures.

Australia’s central bank has extended its streak of monetary policy tightening, delivering a third straight 25-basis-point increase to the official cash rate that has lifted the benchmark to 4.35%. But a leading finance industry analyst is sounding the alarm: the full weight of these successive hikes has yet to hit struggling household budgets, with the most severe mortgage pain still on the horizon.

Following its two-day policy meeting, the Reserve Bank of Australia (RBA) announced the latest rate increase last Tuesday, with eight of the nine-member governing board supporting the hike and one member pushing to hold rates steady at 4.1%. The move follows matching 25-basis-point hikes in February and March, bringing the cumulative increase this cycle to 75 basis points. This puts rates back exactly where they stood in January 2025, before the RBA delivered three rate cuts through that year. The RBA justified the move by pointing to persistent inflation, which remains at 4.6% – far above the central bank’s 2-3% target range. Officials signaled future hikes remain on the table, noting they will closely monitor incoming economic data and shifting global economic conditions.

RBA Governor Michele Bullock acknowledged that geopolitical tensions in the Middle East, specifically the disruption to oil supplies through the Strait of Hormuz – which carries roughly 20% of the world’s daily oil consumption – have already strained household budgets through higher fuel costs. Still, she argued that allowing inflation to remain entrenched would create far worse outcomes. “Australians are poorer because of this shock to oil prices. We are poorer and there is no way out of that, but the trade off is much worse,” Bullock said. “Now I understand this is a really difficult time for households who are already facing higher fuel prices and other cost of living pressures, but we must get on top of inflation now so that it doesn’t get away from us.”

Sally Tindall, director of data insights at finance comparison platform Canstar, explained why the full impact of the three hikes has not yet reached mortgage holders. While banks calculate accrued interest on a daily basis, they do not immediately demand higher repayments from customers. Instead, lenders send formal notifications of changed repayment amounts and give borrowers a grace period to adjust their budgets before the new higher payments take effect. Among Australia’s largest lenders, Tindall noted Commonwealth Bank gives customers a minimum of 20 days from notification to the first higher payment, while the other three major banks require at least 30 days. In practice, this staggered implementation means it takes two to three months for all rate hikes to flow through to borrower repayments. As a result, many households are still only paying the higher rate from the first February hike, and have yet to absorb the increases from March and the latest May move. Tindall added that while the delayed timeline can confuse borrowers, it ultimately works in consumers’ favor by giving them breathing room to adjust their finances.

To date, more than 40 Australian lenders have confirmed they will pass the full 25-basis-point May hike on to mortgage holders, a group that includes Australia’s four largest banks: Commonwealth Bank, Westpac, NAB and ANZ. All four big banks will implement the higher rates from May 15. It is expected that smaller lenders, many of which do not make public announcements about rate changes, will follow suit. Major bank leaders have acknowledged the added pressure on households and highlighted support available for struggling borrowers, alongside increased rates for savers that can offset some cost-of-living pressures. “We recognise many customers are already managing higher living costs, and further rate increases could add to that pressure,” said Angus Sullivan, group executive of retail banking at Commonwealth Bank. “Our focus is on supporting customers to stay on top of their finances, with practical tools, clear guidance and access to help when it is needed.”

Westpac chief executive of consumer Carolyn McCann echoed that commitment, noting that ongoing Middle East tensions have amplified global economic uncertainty and inflationary pressures. “Right now our focus is on helping customers through the current economic environment. We encourage customers who are feeling stretched to reach out early. We have a range of support options available and our teams are ready to help,” she said. “We’ve also increased deposit rates which will provide some relief for savers who are navigating higher living costs.”

Canstar’s analysis puts the tangible cost of the latest hike in perspective: for a borrower holding a $600,000 mortgage with 25 years remaining on their loan, the May increase will add roughly $91 to monthly repayments. When combined with the two prior hikes, the cumulative increase pushes average monthly repayments up by $272 from pre-hike levels. If rates hold steady for the next 12 months, that adds up to an extra $3,265 in annual mortgage costs compared to a scenario with no 2026 hikes.

Even though rates have only returned to 2025 levels, Tindall warned that today’s economic landscape means the burden is far heavier for households. Cost-of-living pressures have intensified dramatically over the past 16 months: grocery prices have climbed, national electricity rebates have expired, and global oil market disruptions have sent fuel prices soaring. “The pressure is actually higher this time around,” Tindall said. “For some households it will be a mountain that is too high to climb and they won’t have the funds for it.”

Tindall noted that Australian households are currently split along sharply different financial lines: some borrowers have built equity buffers and are ahead on their mortgage repayments, while others are already teetering under the weight of soaring living costs. For borrowers struggling to meet new repayment requirements, she advised reaching out to their lender directly or contacting the free, independent national debt hotline to access support.