It's Friday the 1^st of August 2025, and the deputy governor of the Reserve Bank, Andrew Hauser, has added to expectations of an interest rate cut in a fortnight’s time, welcoming this week’s low inflation figures. He added that the central bank wants to be predictable for financial markets. That last comment is significant because money markets are pricing in a 100 per cent chance of the RBA cutting the cash rate at its August 11-12 meeting.

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News in brief

Microsoft and Meta have announced huge quarterly profits, demonstrating that both companies can make money from the AI revolution.

The price of copper, the bellwether commodity, tumbled 20 per cent – the biggest intraday fall since 1988 - after US President Donald Trump announced that refined copper would not attract a 50 per cent levy, though semi-finished copper will.

Australia is under growing pressure to recognise a Palestinian state at the UN General Assembly next month, after Canada joined France and Britain in saying it would do so.

Virgin Australia is set to allow small dogs and cats, under 8kgs, to fly in cabins, alongside passengers, by the Christmas holidays.

Westpac has done a deal to sponsor Australian cricket for a reported $50m over four years, taking the rights from arch enemy Commonwealth Bank. The deal includes an Ashes test series against England, limited overs series against India and South Africa, and women’s matches against India over all three forms of the sport.

Fear-o-meter

There’s an almost audible sense of relief from countries signing tariff deals with the USA (although not India or Brazil). Being hit with 15 or 20 per cent tariffs is much better than 30 or 40 per cent.

True. But it is much worse than limited or no tariffs.

In the excitement of trade delas, it’s easy to forget that tariffs are bad.

Donald Trump might claim to be making America great again, but his tariff policy is making America expensive. US Federal Reserve chair Jerome Powell knows it and yesterday held fire on cutting interest rates, worried that the tariffs could trigger inflation.

Companies like the automakers are announcing hundreds of millions of dollars in extra costs from tariffs.

Australia hasn’t done a deal and that’s not necessarily a bad thing. It means we will probably be levied with a 15 per cent impost – the lowest rate – but at least we won’t be caught celebrating a bad economic decision.

Who's talking today?

On Microsoft's blockbuster quarter, and what the result says about the rest of the Magnificent Seven stocks:

 

"It basically silences any doubts about AI demand. Lots of question marks at the start of the year about how much these companies were spending to grow their AI infrastructure on cloud data centres etc, but essentially that Azure [cloud] business generated $US75 billion in the quarter, which is massive. A huge milestone, 800 million monthly active users as well. 

 

The key thing for me in this report, and I think the takeaway for investors is that it's growing profit very, very fast. Faster than its revenue, so that's a sign of a quality business. They're spending a lot of money, but they're monetising the products at the same time. And that's massive. Monetising AI was what Wall Street was looking for. And that's what we're getting from these businesses now."

Greed-o-meter

Each week media monitoring firm Medianet publishes its Media Visibility Index, ranking the topics covered by the Australian print and online media. It's weighted based on prominence, and then calculated as a percentage of the total number of media items seen during the week. The leader for the last week? No surprise - it's the US President. And we can't see that changing anytime soon.

Source: Medianet

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