This six-month feud has been the only consistent event during COVID-19 and it is steadily intensifying. Recently, Australian exports of seafood has been subject to delays and wine and barley have faced higher tariffs in Chinese markets. Chinese authorities are also reportedly discouraging firms from buying Australian coal, cotton, and timber. China comprises 1/3 of Australia’s exports of goods, but Commonwealth Bank of Australia calculates that 7% of all Australian exports have now been affected by the recent trade restrictions.
For those that don’t remember, this row began after Australia led international calls for an inquiry into the origins of COVID-19. However, it seems there were underlying tensions long before. Australia’s introduction of legislation preventing Chinese interference in Australian politics, its tightening alliance with America and Japan, and Australia’s numerous anti-dumping probes of Chinese goods between 2006-2018 left Australia sitting on a powder keg.
However, this situation may be a blessing in disguise (at least in the long run). A recent poll by the Lowy institute found that 94% of Australians supported government efforts to reduce dependence on China. These government efforts include the pursuit of trade deals, most notably the Regional Comprehensive Economic Partnership, which involves other 14 countries, including China. Whatever the cause behind the trade feud, it is time Australia became more independent on the international stage.
The end of temporary free childcare and higher petrol prices sees consumer prices rising by 1.6% from the June to September quarter. Over June, deflation occurred whereby the CPI reached by 1.9% after the Federal Government temporarily made childcare free. Childcare was the most significant price rise in the CPI from June to September, with the cost of pre-school and primary education jumping 11.1% after free childcare ended on July 13, and the Child Care Subsidy was reintroduced.
“Without the rise in childcare, the CPI would have increased by 0.7 per cent.“ABS Head of Prices Statistics Andrew Tomadini
From April to mid-July, this aimed to help families survive the economic fallout from the coronavirus pandemic.It was the biggest quarterly fall in the 72-year history of the index as childcare fees dropped by 95%.
Australian shares have been falling consecutively, as the initial excitement over coronavirus vaccines subsided and investors cashed out after a strong post-election rally.The ASX 200 closed 13 points (or 0.2 per cent) lower at 6,405.
Global stocks were dragged down further after the US Federal Reserve and European Central Bank said the economy was still in for a tough time, while the Bank of England said there was still a long way for drug trials to go.
After suffering heavy losses in the past couple of days, US technology stocks made a comeback as investors bought the dip. Shares in the so-called “stay-at-home winners” Netflix, Amazon and Apple gained between 1.3 and 2.7 per cent. Moreover, Wall Street’s tech-heavy Nasdaq index jumped (+2pc) to 11,786 points. The S&P 500 closed moderately higher (+0.8pc) at 3,573, while the Dow Jones index fell slightly (-0.1pc) to 29,398.
Encouraging data from Pfizer’s and BioNTech’s late-stage vaccine, earlier this week, prompted investors to sell down their holdings in technology stocks. That rotation away from tech lifted demand for airline and energy stocks, which had been hardest hit by the pandemic and would benefit the most from an economic recovery.