Good afternoon! It’s Friday, Nov 29. Black Friday is at last here after 256 days; Roy Morgan estimates Australians will spend $6.7 billion through Cyber Monday.

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Today's reading time is 7 minutes. - Miko Santos

MORNING MARKET

Presented by CommSec

Thursday was Thanksgiving Day, so US stock markets were closed. During holiday trading, US stock futures went up a small amount. Futures for the Dow Jones went up 120 points, or 0.3%. Futures for the S&P 500 went up 15 points, or 0.2%, and futures for the Nasdaq 100 went up 77 points, or 0.4%. The Dow Jones fell 138 points, or 0.3%, on Wednesday. The S&P 500 fell 0.4%, and the Nasdaq moved down 115 points, or 0.6%. Thursday, stock markets in Europe went up. The FTSEurofirst 300 index went up 0.4% across the whole continent. The UK FTSE 100 index went up by 0.1% in London, and insurance stocks went up by 5.9%.

MORNING HEADLINE

• Webjet Faces Federal Court Battle Over Alleged Price Deception and False Booking Confirmations. Australia's consumer watchdog is suing travel booking website Webjet for allegedly misleading consumers by burying mandatory booking fees of as much as $54.90 in their advertised prices and also for confirming bookings for hundreds of customers whose flights weren't actually booked and later had to be canceled or paid more on.

• 📰Reserve Bank of Australia Split into Two Boards in Historic Reform The most significant reform to how Australia's central bank is managed since its inception, the Australian government passed legislation to divide the Reserve Bank of Australia into two separate boards: one for governance and one for monetary policy, to better make decisions on the economy.

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SOCIAL MEDIA

Australia Sets Global Precedent with Mandatory Age 16 Requirement for Social Media Access

Australia has just set a minimum age limit for social media use at 16 years, becoming one of the first countries in the world to do so legally. The law makes it illegal for anyone under 16 years to hold social media accounts on major platforms like Instagram and TikTok, carrying heavy fines in case of a breach.

Social media platforms would be required to take steps to prevent young people from signing up, with significant financial penalties if they don't comply. The bill protects the need to balance online protection with access to vital services, such as educational resources and mental health support.

The Key Points:

• Under the legislation, children below 16 years of age would not be allowed on social media; the platforms could be fined up to $49.5 million for systematic violations.

• Platforms and not parents or children must be responsible for preventing underage access to social media while making sure that privacy protection is indeed assured.

• The legislation applies to major platforms: Snapchat, TikTok, Meta's Facebook and Instagram, and others, without getting in the way of educational and support services access.

• Implementation will happen in the next 12 months in which alternatives to government-issued ID are needed to verify one's age to comply with new regulations.

Big Picture: The implications of this law go well beyond the borders of Australia. It is a challenge to the hands-off approach to social media regulation and could spark a global movement toward stricter protection for young users, with its effects felt in regulatory frameworks right around the world. This could fundamentally reshape how social media companies operate, potentially leading to new technological solutions.

BIG PICTURE

• US Lawmakers Warn Hong Kong Becoming Hub for Financial Crime Under Chinese Control While Hong Kong vehemently denies these claims as baseless slander, US legislators accuse Hong Kong of turning into a hub for financial crime and supporting sanctioned countries since China's 2020 security law.

• ACCC Grants Virgin Australia-Qatar Airways Interim Alliance for New Doha Flights in 2025. Virgin Australia and Qatar Airways will collaborate on new flight routes between Australia and Doha starting June 2025, with consumer protections in place while final approval is pending from the ACCC.

• Australian Executives in UK Face April 6 Deadline as Non-Dom Tax Shield Ends. After the Labour government ended the "non-dom" tax status that protected Australian executives' overseas holdings, they may leave the UK before April 6 to protect their Australian assets from British inheritance tax.
  
  
  
  

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ECONOMY

RBA's Bullock: Labor Market Tightness Keeps Interest Rates Higher Than Global Peers

RBA Governor Michele Bullock elaborates on why Australia is not cutting rates like its global peers, citing the challenges of high household debt and reliance on commodity exports.

The bank is sticking to a restrictive monetary policy setting despite global peers cutting rates, since tighter labor markets and higher underlying inflation in Australia call for a different approach. The RBA projects inflation to return to its target range by 2026, supported by measures to address supply chain disruptions and boost domestic consumption.

The Key Points:

• Headline inflation has eased to 2.8% but underlying inflation remains elevated at 3.5%

• Cash rate remains at 4.35%, with a sustainable return to the target expected in 2026 as a result of projected improvements in productivity and investment.

• Labor market still tighter than peers, as the unemployment rate in Australia has persistently been below the average of OECD economies.

• Australia's path diverges from that of peer central banks because of local economic peculiarities, such as the dependence on mining exports and the housing market with its problems of affordability.

Big Picture: The RBA's position reflects the broad divergence now evident in global monetary policy, where different countries increasingly follow a domestic lead, compared to the high degree of synchronization seen during the pandemic. That shows how inflation control could vary between different economic systems and may be as complex to negotiate as different types of weather on a global scale.

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HOUSE

Australian Mortgage Stress Hits Two-Year Low as Tax Cuts Provide Relief

The country's housing market has seen a significant fall in the levels of mortgage stress, with the percentage of mortgage holders at risk falling to 26.2% in October 2024, or about 928,000 people, with Stage 3 tax cuts and increased household incomes the major reason.

However, 680,000 more mortgage holders are under stress than the number recorded before the RBA began increasing interest rates in May 2022. That suggests a large increase in financial stress for households. This is the point of reckoning for those who have been continuously experiencing financial struggles as a result of continuous rate increases since 2022.

The Key points:

• Mortgage stress levels have dropped to 26.2% of mortgage holders, the lowest since early 2023, primarily due to Stage 3 tax cuts and rising household incomes

• The number of Australians considered 'Extremely At Risk' stands at 928,000, representing 16.7% of mortgage holders

• A potential RBA interest rate cut in December could further reduce the number of stressed mortgage holders by 24,000 by January 2025

• Employment remains the crucial factor in mortgage stress, with nearly one in five Australian workers either unemployed or under-employed

Big Picture: The broader implications extend beyond individual households to the entire Australian economy. With the reduction in mortgage stress, it can be expected that consumer confidence and spending may increase to stimulate economic growth. Historical data indicates that when people have less financial strain, consumer spending has surged and driven economic expansion. Still, with almost one-in-five workers struggling to find decent employment, sustained recovery for the economy is all about maintaining a delicate balance between inflation control and economic stability. Targeted job creation and upskilling programs would contribute to the mitigation of the employment challenges while supporting economic stability.

TECHNOLOGY & INNOVATION

➡️ Digital Australia 2024: 25.2M Internet Users, TikTok Grows 17% Year-over-Year. With incredibly high internet adoption-25.21 million users, 94.9% of the population-the use of social media dropped a little in 2024 to 20.80 million users, which represents 78.3% of the population. The advertising reach of such popular social media platforms as Instagram showed an increase of 19.7%, while that of Tiktok increased by 17.2%.

➡️ Commonwealth Bank Reveals AI Success: 40% Reduction in Call Wait Times, 30% Less Fraud. While processing over 20 million daily payments, Commonwealth Bank of Australia has used artificial intelligence across its operations to produce significant improvements including halving customer scam losses, reducing fraud by 30%, and cutting call centre wait times by 40%.

➡️ Amazon Escapes €250 Million EU Tax Bill as Commission Drops Long-Running Investigation. Following a 2021 court decision concluding Amazon's tax structure was legal, the European Union has closed its enquiry on Amazon's tax practices in Luxembourg, so relieving the company of €250 million in back taxes.

BUSINESS & MARKETS

➡️ Australian Anti-Scam Centre Intensifies Fight Against Online Shopping Fraud Ahead of Black Friday Sales. Australia's national scam-fighting agency is alerting consumers to exercise caution during Black Friday sales since many bogus shopping websites aiming at money theft have been discovered and they are working fast to close these sites in order to safeguard consumers.

➡️ NAB Launches Weekend Banking: 12 Major Branches to Open Saturdays Nationwide. To make banking more handy for consumers who cannot visit during regular weekday hours, National Australia Bank (NAB) is extending its services to Saturdays at 12 busy shopping centre branches around Australia.

➡️ Bank of Queensland Cuts Bonuses for Junior Staff, Increases Executive Incentives. As part of a larger restructuring effort including 400 job losses and seeks to save the bank $50 million yearly, Bank of Queensland is removing bonus payments for hundreds of junior employees while boosting bonus opportunities for senior staff.

TRAVEL

➡️ Qantas Revolutionizes Travel Booking with New Distribution Model and Premium NDC Options. Aiming at modernising their booking process and adding some fees for some booking methods, Qantas is altering how travel agents can book flights by introducing a new technology system with various pricing tiers and booking options starting July 2025.

➡️ Air New Zealand Loyalty Program Growing 11% Despite Qantas Competition for Elite Members. With 4.7 million members, Air New Zealand notes significant increase in its loyalty programme and is still sure about keeping valuable consumers even if competing Qantas is trying to draw elite-tier members.

➡️ US-China Student Exchange Crisis: American Enrollment in Chinese Universities Plummets 93% in Decade. With American student enrolment in Chinese universities having declined from 15,000 to under 1,000 in a decade and so influencing business relations and travel between the two countries, the Level 3 travel advisory from the US State Department for China has fundamentally affected educational exchanges.

GAMES

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FROM THE TEAM

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