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The Point
Quick, actionable insights for investors
Sep 4
Five major ASX reporting season themes | Aussie spending and rate cuts | The countries benefitting from a weaker US dollar
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Aussies are spending again. But what does it mean for rate cuts?
AUSSIE consumers are spending again – that’s the main message from the June-quarter GDP data out this week.
Overall, growth was slightly higher than expected at 0.6% versus a 0.5% forecast. Annually we are 1.8% stronger than a year ago.
But increased consumer spending comes through as a clear trend, notes Pendal’s head of government bonds Tim Hext.
Despite last year’s tax cuts and February’s rate cuts, for a while it seemed consumers were more interested in saving than spending.
However, household spending rose 0.9% in the last quarter, led by a 1.4% rise in discretionary spending.
Now rate-cut expectations have dropped from 100% chance of one cut by November to 90%.
“It does all feed into the idea that the RBA has time and optionality on its side,” says Tim.
“If the consumer gets more confident from here, some may ask if any more rate cuts are needed.”
How to identify emerging markets benefitting from a weaker US dollar
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How to identify emerging markets benefitting from a weaker US dollar
A weaker US dollar is creating support for emerging-market equities – but not all countries will benefit equally.
The US Dollar Index – which measures the USD against other major currencies – is down about 10 per cent this year.
EM returns have historically been strongest when the US dollar is weak, because servicing US-dollar debt becomes cheaper; domestic purchasing power in EMs improves; and cheaper imports help keep inflation under control, creating room for rate cuts.
Still, while EM performance lifts as the US dollar weakens, the effect is uneven and investors should be discriminating in country selection, cautions Pendal’s EM team.
Economies with a current account deficit – common in Latin America and South-East Asia – benefit most from cheaper borrowing, lower imported inflation and stronger consumer demand.
But big exporters that run a surplus such as Taiwan and Korea can face headwinds as their products become more expensive in US-dollar terms.
Crispin Murray: What’s driving the ASX this week?
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Crispin Murray: What’s driving the ASX this week?
Pendal identified five major themes this ASX reporting season.
1. Overall earnings were okay, with similar trends to February in terms of misses and beats. A third of companies beat by 5% or more and 22% missed.
2. Stock volatililty reached new highs on result days, driven by the tone of messaging and revisions. Almost a third of companies experienced stock moves more than three standard deviations away from their average on reporting day.
3. Rating changes were the most material driver of returns. The biggest re-ratings were generally stocks beginning to stabilise or those that affirmed their status as safe havens.
4. Disappointing large caps were hit harder than smalls. The average two-day relative return for industrial large caps that missed consensus EPS by more than 5% was -7.2% for the ASX 100, versus -3.8% for small caps.
5. Domestic stocks generally performed better than internationally-exposed companies.
Amy Xie Patrick: What the Fed’s shift from inflation to employment means for investors
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Amy Xie Patrick: What the Fed’s shift from inflation to employment means for investors
A shift in focus from inflation to employment hints at a likely rate cut in September observes Pendal’s head of income strategies AMY XIE PATRICK
In her latest article, Amy explains how she is positioning Pendal’s income funds in response to these and other global factors.
Pendal profile: Meet Australian equities analyst and portfolio manager Elise McKay
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Pendal profile: Meet Australian equities analyst and portfolio manager Elise McKay
AUSTRALIAN equities have the potential to offer investors a compelling trio of benefits, argues analyst and portfolio manager Elise McKay.
In this video, Elise explains how the Pendal investment process helps her team identify and take advantage of opportunities in Australian shares.
Latest updates from our fund managers
Income and Fixed Interest
Aussies are spending again. But what does it mean for rate cuts?
September 3, 2025
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Emerging Markets
Emerging markets: Look past commodity exports to countries with strong domestic demand
July 26, 2023
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These podcasts are for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. They have been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on the information, consider its appropriateness having regard to their or their clients’ individual objectives, financial situation and needs. The information is not to be regarded as a securities recommendation.
The information in these podcasts may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this presentation is complete and correct, to the maximum extent permitted by law neither Pendal nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.
Any projections contained in these podcasts are predictive and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.
Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.
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Oct 17
A green bond that could fund a national park | Market reaction to US election polls | Go for balance in uncertain times | Debunking a sustainable investing myth
An Aussie green bond that could fund a new national park while generating returns
Sustainable investors looking to fund nature repair often lack high-quality opportunities.
But a proposal to restore national parks in Victoria could be just the thing, says Regnan ESG and impact analyst Murray Ackman.
A proposed green bond offers the opportunity to unlock hundreds of millions in private capital to support the expansion of national parks in Victoria’s central highlands, including a “Great Forest National Park”.
The park is under consideration by the Victorian government as a possible use for public land previously allocated to timber harvesting in Gippsland and North-East Victoria.
No decision has yet been made. But advocates say the national park would attract 379,000 extra visitors and more than $40 million to the local economy every year.
A $224 million state government green bond is proposed to fund the forest’s restoration using private capital.
“From an investor perspective, everyone’s talking about nature repair and biodiversity but there are few investable opportunities,” says Murray.
“It’s exciting that world experts and academic leaders have come together to propose a viable, reliable way to invest in nature repair.”
Investor returns should be attractive, says Murray.
“We have noticed quality green, social and sustainability bonds have heightened demand in the secondary market and tend to outperform.”
Crispin Murray: What’s driving the market this week?
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Crispin Murray: What’s driving the market this week?
With barely three weeks to go, Donald Trump has gained momentum in average betting odds, moving to a 56% chance of a win versus 43% for Kamala Harris.
It’s his biggest lead since Harris entered the race. How are investors reacting?
“Market volatility has picked up, but the forward curve has this falling back post-election,” note Pendal’s head of equities Crispin Murray.
“To date, this has not impacted equities and is supported by credit spreads staying low.
“The most likely election outcome is a Democrat or Republican presidential win without sweeping both the House and Congress – and hence being constrained in what they can achieve.
“The main difference in market impact relates to bonds, with Trump’s threat of higher tariffs and less immigration potentially leading to higher inflation in late 2025, and therefore to higher yields.
“This may have limited impact on equities as it could be seen to come with higher growth.”
Crispin explains more in his latest weekly note
Elise McKay: What’s driving equities this week?
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Elise McKay: What’s driving equities this week?
Here are the main factors driving the ASX this week, according to Aussie equities analyst and portfolio manager ELISE MCKAY and reported by investment specialist JONATHAN CHOONG.
Read Pendal’s latest weekly equities overview.
Income & Fixed Interest: Pendal’s quarterly insights on the themes driving Aussie markets
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Income & Fixed Interest: Pendal’s quarterly insights on the themes driving Aussie markets
In their latest quarterly report, the team discusses some of the biggest trends affecting Australian fixed income investors right now – click through.
Tim Hext: Inflation is easing, but the RBA isn’t celebrating yet
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Tim Hext: Inflation is easing, but the RBA isn’t celebrating yet
The latest GDP data shows a weak Australian economy, but the numbers should pick up from here, says Pendal’s head of government bonds, Tim Hext. Here are five takeaways.
1. Government spending remains strong despite government investment tapering off. “This remains a central factor behind strong employment and inflation – and the animated debate between Treasurer Chalmers and RBA Governor Bullock,” says Tim.
2. Households are going backwards again. “Tax cuts and subsidies could bring the consumer back in Q3, but early data from July suggests it may be a slow burn.”
3. Households are barely saving anything. This likely indicates incomes not keeping up with prices rather than exuberant consumer spending, says Tim.
4. Australia’s commodity boom is waning (a negative for GDP) but remains historically strong
5. GDP should pick up from here. The RBA is forecasting 1.7% GDP this year and 2.6% in 2024-25. Since the first two quarters are up 0.4%, the RBA is expecting 0.6% to 0.7% quarterly rises over the next year.
“That may seem a bit optimistic, but the possibility of rate cuts and falling inflation could well see a decent rebound in the economy.”
Read Pendal’s latest fixed-income report
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