Your Weekly Wrap: China's Pivot, Coffee's Peak, and Australia's Job Streak

Hello!

We hope everyone is enjoying their weekend so far!

We’re back with five of this week's biggest local and global stories that shaped markets.

Plus, we're spotlighting the week's biggest movers on the ASX.

We'd love to hear your thoughts on this new format. Enjoy!

#1 China Signals Historic Monetary Policy Shift to Boost Growth

China has announced its first monetary easing stance in 14 years, marking a decisive shift in Beijing's approach to managing the world's second-largest economy. The Communist Party's Politburo revealed plans on Monday to adopt an "appropriately loose" monetary policy in 2024, coupled with more proactive fiscal measures to stimulate growth.

The policy shift was further solidified during Thursday's central economic work conference, where leaders pledged to expand fiscal support through increased deficit spending and treasury bond issuance. The two-day meeting outlined plans for interest rate cuts and reductions in banks' reserve requirements.

Markets responded positively to the announcements, with Hong Kong's Hang Seng index surging 2.8% to a month-high on Monday. However, it moderated throughout the week and closed up 1.2%.

The Australian Materials sector reacted positively to the news, popping 3.04% on Tuesday, but gave back all of the gains to end the week more or less where it started.

#2 Interest Rates Remain on Hold

The Reserve Bank of Australia met on Tuesday, keeping the cash rate on hold at 4.35%—in line with market expectations. At the meeting, RBA Governor Michele Bullock adopted a more ‘dovish’ stance, expressing confidence in falling inflation rates. The central bank removed its previous warning about potential rate hikes while acknowledging that economic and wage growth had been weaker than anticipated since its November meeting.

Thursday’s labour market data potentially threw a spanner in the works. The unemployment rate unexpectedly fell to 3.9% in November, its lowest level since March, defying market forecasts of 4.2%. The number of unemployed people decreased by 27,000 to 595,300, with reductions in full-time and part-time job seekers.

Markets are pricing in a 62% chance of a 25 bps rate cut when the RBA meets next on February 18. This is down from as high as 84% earlier in the week.

#3 ACCC Clears Path for Major Radiology Merger

The Australian Competition and Consumer Commission (ACCC) has given conditional approval for Integral Diagnostics' acquisition of Capitol Health, setting the stage for a significant consolidation in Australia's diagnostic imaging sector. The merger, which combines two of the country's largest radiology providers, received regulatory clearance subject to the divestment of Capitol Health's clinic in Melton, Victoria.

The strategic combination will create a substantial nationwide imaging network, with Integral Diagnostics set to acquire 60 radiology sites across Victoria, Western Australia, Tasmania, and South Australia. This will expand Integral's footprint from its 70 locations to form a comprehensive network of 130 diagnostic imaging centres across Australia and New Zealand.

The transaction, initially announced in June 2024, is proceeding via a scheme of arrangement with confirmed key dates. Capitol Health shareholders will receive their Integral Diagnostics shares on December 20, followed by Capitol's delisting on December 23.

#4 Corporate Crackdown

In a week of heightened regulatory action, the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) have launched significant investigations and legal proceedings against several prominent Australian companies.

1. Regional Express (Rex) is facing civil proceedings from ASIC in the NSW Supreme Court over allegations of misleading conduct regarding a February 2023 profit projection announcement. The regulator alleges that the airline and its executives, including former chair Lim Kim Hai, directors John Sharp and Lincoln Pan, and former director Siddarth Khotkar, breached disclosure obligations.

2. Steadfast has received ASIC notices regarding suspicious trading by two employees between August 30 and September 2, 2024.

3. Downer EDI and Ventia Australia are facing Federal Court proceedings from the ACCC over alleged cartel conduct. The companies and four executives are accused of price-fixing Defense Force property maintenance contracts between 2019 and 2022, which affected services across more than 200 military bases.

#5 Coffee Bean Prices Hit 50-Year High

Coffee lovers worldwide face steeper prices in 2025 as global coffee bean prices surge to their highest levels since 1977, driven by severe weather conditions affecting major producing nations. Arabica beans, the world's most popular variety, recently peaked at $3.44 per pound, marking an 80% increase this year, while robusta beans used in instant coffee have nearly doubled in price to $5,694 per metric tonne.

The crisis stems from unprecedented weather challenges in key growing regions. Brazil, the world's largest coffee producer, experienced its worst drought in 70 years during August and September, followed by destructive heavy rains in October. Similarly, Vietnam, which produces 40% of the world's robusta beans, faced a severe drought earlier this year before being hit by abnormal rainfall from October onwards.

Major industry players are already responding to the supply squeeze. Nestlé, owner of Nescafé and Nespresso, has announced plans to increase prices and reduce package sizes to offset rising costs. Nescafé Original instant coffee is already up 15% year over year.

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💰️ Weekly Movers & Shakers 👇️ 

Some of the ASX companies that saw sharp moves this week ⬇️ 

The Winners

1. WA1 Resources reported successful metallurgical testing at its West Arunta Project's Luni deposit, achieving 50% Nb2O5 concentrate with 58% recovery using a two-stage flotation process. Testing covered a 400m zone using samples from three drill holes in the northeast area.

2. Insignia Financial confirmed yesterday that it received a preliminary, non-binding takeover proposal from Bain Capital to acquire all its shares for $4.00 per share.

3. Mesoblast had no key news this week. Momentum continued after it reported last week that its cell therapy product Revascor® has received FDA Regenerative Medicine Advanced Therapy designation following successful trial results in children with hypoplastic left heart syndrome.

4. Vault Minerals had no key news this week that might have affected its share price, which has risen over 17% in the last month.

5. Tabcorp moved higher without a material announcement. However, directors have recently been buying more of the company’s shares. Karen Stocks ($49k), Brett Chenoweth ($100k), and David Gallop ($20k) recently purchased shares.

The Losers

1. Clarity Pharmaceuticals fell again by more than double-digits this week despite no key news. The stock has been on a steady downtrend after reaching all-time highs of $8.79 in September. The company will enter the ASX200 as part of the ASX quarterly rebalance, which will take effect on December 23. The stock has increased by over 168% in the last 12 months.

2. Ventia Services stock tanked after the ACCC said it started civil proceedings against Ventia and two of its employees in the Federal Court, alleging contraventions of the Australian competition law provisions.

3. Accent Group's share price fell sharply despite no key news driving it down. On November 22, Accent Group provided a trading update, reporting that like-for-like sales in the first 20 weeks of FY25 were up 6.8%.

4. Spartan Resources fell this week after confirming it had issued 166,666,667 new ordinary shares to Institutional investors for $1.32.

5. Domino’s Pizza lost ground this week, with no key news driving down the share price.

The Last Word

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DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.