Local share market snaps an eight-day winning streak

ABC NEWS (Australia)

Profit taking has seen Australian shares drop during the day's trade, with markets pricing in an expected interest rate cut from the Reserve Bank on Tuesday. The US has meanwhile lost its AAA credit rating from Moody's, off the back of the Trump administration's policies around tax cuts. It's the first time the Americans have had a ratings downgrade in over a century.

Transcript

00:00Moody's has cut America's credit rating for the first time since 1917, from AAA to AA1,

00:08below Australia's credit rating.

00:10The United States has held on to its AAA rating through the post-First World War recession,

00:16the Great Depression, World War II, Korean War, Vietnam War, the oil crisis of the 70s,

00:21the dot-com bust, the GFC and the pandemic, but it couldn't survive the Trump administration's

00:262025 budget, with big tax cuts to be offset by spending cuts.

00:32Moody's says it doesn't believe the spending cuts.

00:35Treasury Secretary Scott Bessent says, who cares?

00:38Qatar doesn't, Saudi doesn't, UAE doesn't.

00:41Markets will probably care more than Qatar.

00:44The US share market closed higher before the Moody's announcement, but the US dollar fell

00:48a bit afterwards and the interest rate on US bonds rose and Asian markets went down.

00:54The local share market fell 0.6% because of some spirited selling of globally-focused

00:58stocks like Macquarie, BHP and Woodside, and that followed falls in the prices of iron,

01:03ore-based metals and gold, although crude oil went up.

01:07And the Aussie dollar is trading roughly steady at 64 US cents.

01:12Ahead of tomorrow's interest rate announcement, here's a graph of house price gains in the two

01:16years after the start of the previous ten rate-cut cycles.

01:20Now, the least was 5%, the most 60% after 1998, and the average, 20%.

01:27Now, Coatality has produced some graphs of the percentage of houses worth more than a

01:32million dollars.

01:33Nationally, it's a bit more than a third and there's likely to be a lot more in two years

01:38after four or five rate cuts, but check out Melbourne and Sydney.

01:42The percentage of million-dollar houses in Sydney is twice what it is in Melbourne.

01:46And that's finance.

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