In finance, the Commonwealth Bank shares rose today after the bank reported higher profits and hinted at further gains if interest rates are cut. Alan Kohler has the details.
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00:00Commonwealth Bank is the most expensive major bank in the world.
00:06After an incredible 18-month surge, its share price is 26 times profit, which is unheard
00:10of for a bank.
00:12Today, CBA said profit had increased 2%, dividend is up 4%, and CEO Matt Comyn said Australia
00:18has reason for optimism.
00:21So investors optimistically bid the stock up another 2%.
00:25Other banks got caught in the slipstream, retailers went up as well, and the market
00:28closed 0.4% higher.
00:31The Aussie dollar is higher because the US dollar went backwards, which it's been doing
00:34since the week before Donald Trump was inaugurated.
00:37In the three months before that, foreign exchange punters were busily doing the Trump trade,
00:42that is, betting that his tariffs would cause inflation and higher interest rates.
00:47But the Trump trade has backfired now because everyone thinks the tariffs will depress the
00:50US economy and result in lower interest rates.
00:53And the main problem, of course, is that it's just hard to keep up.
00:57The US market was flat last night, while other global markets went up.
01:01Gold and other metals reversed today, while the oil price went up because some Russian
01:05tankers headed for China were blacklisted.
01:07We got some data on new car sales today, and it's all about hybrids.
01:12Sales of plug-in hybrids surged 95% in 12 months, while sales of fully electric vehicles,
01:17as well as petrol and diesel ones, fell.
01:21And finally, as we prepare for next week's interest rate decision, this graph shows the
01:25performance of house prices during the past four interest rate easing cycles.
01:31The average rise two years after the first rate cut is about 12%.
01:36So what next week's cut, if there is one, won't do, is make houses more affordable.
01:43And that's finance.