Today’s News

The Big Picture

• High-speed rail to cost $300m before building begins. The Labor government released the Sydney-Newcastle high-speed rail business case, which cost over $70 million. An additional $230 million of planning and development will take two years, at which point the $61.2 billion construction begins. (Guardian)
  
  

• Inflation remains red hot at 3.8%, driven by housing. The ABS has announced inflation for the 12 months ended January came in at 3.8%, with housing costs, the largest factor, increasing by 6.8% in the same period. This marks seven consecutive months over 3%, the upper limit of the RBA’s inflation target. (ABS)
  
  

• Gold Coast Trump Tower developer’s dodgy business history. Developer David Young has previously left lenders on the hook for $28 million after his development business went bankrupt in 2010. In the fallout, he failed to file key financial information, lied to the company’s liquidator, was uncontactable by lenders and fled ASIC prosecution. (ABC)
  
  

• Trump tariffs come in below threatened rate. After Trump threatened a global 15% tariff, the US has enacted a global 10% tariff with no directive to increase the rate. The White House is seeking to increase the tariff but has not stated when or if this change would come into effect. (BBC)
  
  

• Aussie dollar boosted by global yield seekers. Global investors are piling into Australian bonds, which are seeing stronger yields due to rate hike expectations. This demand has sent the Australian dollar to a three-year peak of over US$0.71. (AFR)

Companies in the news

• Australian AI layoffs ramp up as WiseTech axes 30% of workforce. The software giant will cut 2,000 developer and customer service jobs, stating AI has reduced the need for the jobs. This follows Telstra’s 650 AI-related layoffs and echoes US companies like UPS, Amazon, and Dow Chemical, who axed tens of thousands of jobs amid increased AI integration. (AFR)
  
  

• Anthropic’s pacifism draws ire of Pentagon. The AI firm has declined to allow its AI models to be used for military applications. In response, the US Department of Defence has threatened to force access to Anthropic’s models using national security legislation. (BBC)
  
  

• Woolies surges on strong first-half results. The supermarket giant reported a 16% increase in net profit excluding a one-off legal charge. Woolies has also seen 6% sales growth to begin the year. Investors were enthused; the stock traded up 12% on the results. (ABC)
  
  

• AMD chases Nvidia with new $100bn deal with Meta. The deal will see Meta deploy up to 6 gigawatts worth of AMD chips in exchange for up to a 10% stake in the chipmaker. AMD seeks to compete with Nvidia, which currently dominates the chipmaking industry. AMD stock rose 9% on the news. (NYT | WSJ)

  
  

• Novo Nordisk cuts US drug prices. Fierce competition with rival Eli Lilly has forced the Danish drugmaker to cut the prices of its weight-loss drug Wegovy and diabetes drug Ozempic by 50% and 35%, respectively. Novo’s new obesity drug CagriSema also showed lower weight loss results in recent trials, creating what Morgan Stanley analysts called a “worse-case scenario”. (FT)
  
  

• Paramount comes in with final offer for Warner Bros. The politically-charged tale has reached a breaking point as Paramount is offering $31 per share for Warner Bros, up from its previous $30-per-share offer. This was in response to Warner Bros’ deadline for a best and final offer. (NYT)
  
  

• Stripe soars to $159bn in new deal. The fintech, which processed nearly $2 trillion in payments last year, announced a deal to allow employees to sell shares to institutional investors at a $159 billion valuation, a 70% jump in valuation. (FT)

What the…?

TAFE-famous vintage Holden heads to auction. Back in 2011, Wollongbar TAFE received a donation: a 1986 VL Holden Commodore. The classic Commodore may be the most well-maintained car in the state, with over 700 apprentices using it to sharpen their skills over the car’s 15-year tour of duty at the TAFE.

The Commodore will now fund further philanthropic pursuits, as it is being auctioned to fund the region’s rescue helicopter service. It is expected to fetch up to $50,000, which will fund up to 10 life-saving missions for the helicopter. (ABC)

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Today’s Insight

An economist’s take on housing

On Monday’s episode, we were joined by Diana Mousina, Deputy Chief Economist at AMP. As tends to be the case, we drifted into one of our favourite topics: Housing. Diana was happy to give us a rundown on economics behind the housing landscape, which we’ve consolidated into a few key takeaways.

Australian housing is a complex landscape for investors, with house prices in major cities continuing to rise despite broader economic concerns and factors that would otherwise drive them down. Diana forecasts a modest 3-4% annual price growth over the next few years with no sharp correction on the horizon. The ongoing supply-demand imbalance and government schemes to assist first-home buyers could push prices higher, especially in areas with constrained supply.

For investors, this environment calls for a careful balancing act. Property investments, particularly in demand-heavy regions, remain promising, but rising utility costs, elevated rents, and tighter affordability could dampen long-term growth, making it essential to remain cautious about overexposure to residential real estate.

On the broader economic front, Australia's resilience is evident in its low unemployment rate, but high inflation and interest rate hikes remain key concerns for investors. Investors would do well to remain diversified across sectors that benefit from inflation hedges, such as commodities or infrastructure, and not put all their eggs in the housing basket.

Today in Equity Mates