In Q4, Australian wages increased by 4.2% year-on-year after rising by 4.1% in Q3. Economists forecast wages to increase by 4.1%.
According to the ABS,
The Q4 wage data could offset the effects of RBA monetary policy and increase disposable income. An upward trend in disposable income may fuel consumer spending and demand-driven inflation.
On February 6, RBA Governor Michelle Bullock discussed embedded inflation risks to the economy. Significantly, the RBA Governor could not discount the chances of an RBA rate hike. If the wage growth translates into a pickup in household spending, the RBA could hike rates to curb spending and tame inflation.
On Wednesday morning, the ASX 200 was down 0.74% to 7,604. Investor jitters ahead of NVIDIA Corp. (NVDA) earnings and the FOMC Meeting Minutes set the tone for the session.
Increasing pressure on the RBA to raise interest rates and corporate earnings also pressured the ASX 200.
Rio Tinto Ltd (ASX: RIO) was down 3.26%, dragging BHP Group Ltd (BHP) and Fortescue Metals Group Ltd. (FMG) deep into negative territory. BHP and FMG were down 3.29% and 4.36%, respectively. Investors reacted to full-year earnings.
Woolworths (ASX: WOW) tumbled by 8.98%. Company CEO Brad Banducci announced he would step down after reporting a $781 million loss, spooking investors.
The AUD/USD saw modest gains despite the Australian wage growth numbers. On Wednesday morning, the AUD/USD was up 0.08% to $0.65535.
Elsewhere, the Hang Seng Index (+1.13%) made early gains, with tech and property stocks among the front runners. On Wednesday morning, the Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) were up 2.17% and 1.23%, respectively.
However, the banking sector will be under the spotlight. Hang Seng Bank (HK: 0011) and HSBC (HK: 0005) will release earnings on Wednesday. HSBC and Hang Seng Bank were up 0.64% and 0.67%, respectively.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.