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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.
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On-demand webinar: How to position portfolios for a falling-rates environment
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On-demand webinar: How to position portfolios for a falling-rates environment
A gradual rate cut path over 2025 should support economic growth, meaning investors should think carefully about fixed-income positioning. Pendal’s TIM HEXT and ANZ’s ADAM BOYTON explain in a new webinar
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 head investment specialist CHRIS ADAMS
Read Pendal’s latest weekly equities overview.
Feb 6
Impact of Trump’s tariffs | How to approach volatility in AI stocks | Inflation data “good news” for RBA
Samir Mehta: Trump tariffs are unlikely to impact China’s big online retailers
Investors should be ready for any scenario as Donald Trump weaponises trade tariffs.
This week we await the outcome of a call between Trump and Chinese president Xi Jinping to find out if tit-for-tat US-China tariffs will be paused as they were for Mexico and Canada.
But either way it would take a lot to disrupt the momentum of China’s big online retailers, argues Pendal’s Samir Mehta.
Last year China’s four big online shopping platforms – Alibaba’s AliExpress, TikTok, Shein and Temu – shipped almost $US200 billion worth of goods internationally. Of that, some $45 billion went to the US.
In anticipation of tariffs, Temu and Shein had already modified bulk shipping, diversified logistics and expanded their US networks. Meanwhile as TikTok’s future hung in the balance, Americans flocked to another Chinese app: Xiaohongshu.
“When a product provides a value proposition far superior to alternatives, tariffs might temporarily alter – but not permanently change – human behaviour,” says Samir.
Elise McKay: How equities investors should think about China’s disruptive DeepSeek AI
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Elise McKay: How equities investors should think about China’s disruptive DeepSeek AI
Market volatility sparked by China’s surprise DeepSeek AI app underscores the benefits of taking an active approach to portfolio management, argues Pendal’s Elise McKay.
DeepSeek rocked the tech world last week by demonstrating performance similar to OpenAI’s ChatGPT at a fraction of the development cost.
Market reaction was swift. Nvidia, the leading supplier of AI chips, dropped 17 per cent.
“The day-one market reaction is not necessarily reflective of the medium-or-longer-term outlook,” says Elise. “It is important to look through the noise.
“Volatility is a reflection of the unknown — and uncertain situations can create opportunities as we get clarity.
“DeepSeek demonstrates how the increasing influence of passive money in equity markets is creating opportunities for active managers.
“Cheaper AI shifts power away from the handful of hyper-scalers who could previously charge a premium for access. Open-source models mean a wider range of people can use it.”
“That could mean a broadening of market leadership away from the Magnificent Seven tech leaders such as Nvidia and Meta.”
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