RBA deputy governor speaks exclusively to ABC News — as it happened

• ASX 200: +0.3% to 8,720 points.
• Australian dollar: -0.3% at 67.02 US cents
• Wall Street: S&P500 -0.3%, Dow -0.9%, Nasdaq +0.1%
• Europe: Dax +0.9%, FTSE -0.7%, Eurostoxx 600 -0.1%
• Spot gold: -0.6% to $US4,425/ounce
• Brent crude: +0.5% to $US 60.28/barrel
• Iron ore: -0.8% to $US108.85/tonne
• Bitcoin: -0.3% at $US91,027

Prices current at around 4:30pm AEDT

OK, that’s a wrap.

It’s been a privilege monitoring the day in business and finance with you today.

Catch you tomorrow.

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The interview with RBA deputy governor Andrew Hauser is now live in full.

Watch his sit down with business editor Michael Janda on rates and inflation, and a range of other topics from Australia’s economic capacity to geopolitical risks and the AI tech rally:

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Hi Mark,

There are several posts in the blog and an article on the ABC News front page.

Thanks,

DT

Traders’ eyes remain glued to oil markets.

“Oil remains a focal point early at the start of the year, briefly dipping below USD$60 a barrel amid fresh headlines around Venezuelan supply,” eToro market analyst Zavier Wong said.

“Energy stocks were positive for the day, and investors clearly aren’t overly convinced for now that this will be a long-lasting supply shock, but there is no doubt we’ll continue to see volatility in oil prices and energy stocks in the first quarter of the year, particularly if geopolitical risks continue to flare.”

LK,

I’d point the finger at one of the index’s biggest movers: CBA.

DT

The S&P/ASX 200 has closed up 25 points or 0.3% to 8,720.

The top-performing stocks throughout the day were Mesoblast, up 9%, and ZIP Co, up 7%.

Over the past five days, the index is virtually unchanged.

Shipping costs are coming down.

The Baltic Dry Index (BDI) has fallen 3% in Asian trade to 1,776.

The BDI tracks global shipping costs.

It’s now at a more than five-month low, due to lower rates in the capesize and panamax segments.

Oil producer Chevron is in talks with the US government to expand a key licence to operate in Venezuela so it can increase crude exports to its own refineries and sell to other buyers, four sources close to the negotiations said on Wednesday.

The talks come as Washington and Caracas progress in talks to supply up to 50 million barrels of Venezuelan oil to the United States and President Donald Trump presses American oil companies to invest in the South American country’s energy sector.

US officials have said this week that proceeds from the Venezuelan oil supply, which is expected to help state energy company PDVSA drain inventories amid a severe oil blockade, will go to a US-overseen trustee. Proceeds are meant to finance supplies of American goods to Venezuela.

Chevron is the only US oil major operating in Venezuela, which it does under an authorization from the US government that exempts it from sanctions on the country.

Reuters

Japan’s Nikkei 225 and Hong Kong’s Hang Seng are both down over 1%.

A quick check in on how financial markets are pricing the prospect of a rate hike in February.

Yesterday, according to Bloomberg data, there was around a 37% chance of a hike next month.

Earlier, in an interview with ABC News, RBA deputy governor Andrew Hauser declined to say whether that was a “sensible estimate of the outcome”.

This afternoon, chances of a hike have now edged lower to 30%, according to Bloomberg market pricing.

Mr Hauser talked down the significance of yesterday’s cooling inflation data, describing it as “helpful” but “largely as we expected”.

He said the RBA was more concerned with inflation a year or two out than current inflation, and noted that things have been tracking largely in line with RBA forecasts.

More comments from Mr Hauser here:

For the diehards out there, Wall Street Futures are tracking lower.

Dow Futures are lower by 0.1%, while NASDAQ futures are off by 0.2%.

Oil is rallying in afternoon Asian trade.

Gold is slipping back a tad, down 0.3% at $US4,439/oz.

Palladium is off by 0.7% at 3:15pm AEDT $US1,752.

It’s worth noting that after EVERYTHING the markets have digested over the past four trading days, the VIX (or fear) index has only risen 4% to 15.

It’s hovering close to recent lows.

The market is clearly looking through much of the present geo-political risks.

Australia’s share market is creeping higher as energy stocks and banks tick upward, despite profit-taking in miners after a recent run-up.

“Commodities are slipping, setting a cautious tone for the local session,” Moomoo dealing manager Jimmy Tran said.

Four of 11 local sectors were trading clearly lower by lunchtime, with raw materials down 0.6% after three sessions of solid gains.

Large-cap miners BHP, Rio Tinto and Fortescue moved lower, despite iron ore futures easing from multi-month highs, while copper prices ran into resistance.

BlueScope Steel shares fell 1.6% to $29.39 after rejecting a “highly opportunistic” takeover bid from a consortium comprising the Stokes family-controlled SGH and US-listed Steel Dynamics.

Reporting with Reuters

Hi Philip,

I can’t argue with that!

DT

As we head into the afternoon session, Asian markets are weaker:

Hong Kong’s Hang Seng is down 1.2%.

Japan’s Nikkei 225 is 0.6% lower.

China’s Shanghai Composite is off by 0.4%.

Earlier, we reported that, since September last year, lower-priced homes that fall under the expanded Home Guarantee Scheme price caps have recorded stronger growth than higher-priced homes.

The housing minister’s office has since responded to the report.

“Labor’s 5% Deposit Scheme could save a prospective purchaser up to 8 years off the time it takes to save for the deposit for a median house, meaning they could pay up to $250,000 towards their own loan instead of paying rent to someone else,” a spokesperson for the housing minister said.

“Take-up of the scheme since it was expanded is in line with Treasury forecasts — and suggests only a very minor impact on prices.”

Australia’s goods trade surplus fell in November after two consecutive rises.

Official figures show the balance on goods down $1417m, as exports fell 2.9% (month on month), and imports rose 0.2% month on month.

“The weakness in iron ore exports outweighed solid rural gains, and import growth remains subdued,” Oxford Economics said.

“Looking ahead, weaker global demand and softer commodity prices are expected to weigh on export values over this year.

“Meanwhile, investment in data centres is likely to support further growth in capital goods imports despite its volatility at the early stage.

“Combined, these trends should place downward pressure on the trade surplus.”

The Reserve Bank is warning of overvalued financial markets.

Wall Street continues to push record highs while the Australian sharemarket hit all-time highs in October.

Technology stocks on Wall Street are behind much of the investor enthusiasm.

RBA deputy governor Andrew Hauser has told the ABC the Reserve Bank is ready to act should “exceptionally high valuations” rattle the financial system.

“The bad outcome would obviously be that some of these potential, geopolitical flashpoints, including in Asia, crystallise and become real, that people lose confidence in what are obviously exceptionally high valuations for technology stocks and others,” he said.

“And that the financial market pricing, which is so extreme, adjust downwards.

“Australia won’t escape some of the consequences if that happens.

“And we need to be ready for it.”