Consumer confidence at its lowest in Australia since 1990s recession
High interest rates and the cost-of-living crisis are creating a gloomy outlook among many
2 min
Consumer confidence fell in January to its lowest level for the first month of a new year since the 1990s recession. The Westpac-Melbourne Institute Consumer Sentiment Index fell 1.3 percent to 81 points. Westpac senior economist Matthew Hassan said this reading was in the bottom 7 percent of all sentiment measures ever recorded since the survey began in the mid-1970s.
“For consumers, the new year looks to have picked up where the old one left off: cost of living and high interest rates continuing to dominate and sentiment bumping around deeply pessimistic levels,” Mr Hassan said. “The continued weak reads on sentiment show Australian consumers remain under intense pressure as the surging cost of living, materially higher interest rates and rising tax take weigh heavily on incomes.”
The sub-indexes measuring consumers’ outlook for the economy and their personal finances in 2024 remained “materially below long-term averages”. Mr Hassan said there was a further deterioration in family finances this month.
“The ‘finances compared to a year ago’ sub-index dropped 7.6 percent to 63, unwinding most of the 11 percent improvement seen over the three months to December. Those in low- and middle-income brackets reported the biggest deterioration in the month.”
Australians are also worried about the medium to long-term prospects for the economy. Consumers’ five-year outlook on the economy fell 6.1 percent to 89.1 points, with young renters driving this fall.
Just over half of the 1,200 people who participated in the survey said they expected interest rate rises to continue in 2024. This is down from 60 percent in December and follows the lower monthly inflation reading of 4.3 percent in November, as well as expectations in the United States that the Federal Reserve will begin cutting interest rates in the world’s biggest economy this year.
Mr Hassan commented that Australian consumers are much more ‘hawkish’ on rates than the financial markets and economists. “While just over half of consumers expect mortgage rates to rise, futures markets are currently pricing in 50bps in cuts by year-end, with three out of four economists also expecting the cash rate to move lower,” he said.
Housing-related sentiment continued to show “a stark gap between buyer sentiment and price expectations”, Mr Hassan noted. The ‘time to buy a dwelling’ sub-index fell 3.1 percent to 72 points, which is considered very weak. More than two-thirds of consumers expect house prices to rise in 2024. This follows a surprising 8.6 percent lift in the national median house price in 2023, according to CoreLogic data.
This price growth was largely due to fewer homes for sale, more cash buyers at the market’s upper end, greater demand in cheaper suburbs, which resulted in strong price growth, and increased first home buyer activity facilitated by the Bank of Mum and Dad and the expanded First Home Guarantee scheme.
Looking ahead, the December quarterly inflation read to be released by the Bureau of Statistics on 31 January will be critical to the Reserve Bank’s next interest rate decision on 6 February, said Mr Hassan.
“On balance, we expect the RBA to leave rates unchanged in February, and to be unlikely to raise rates further from here,” he said. “However, a material upside surprise on inflation would make for a more finely balanced decision.”
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Gold miners are emerging as a compelling way to navigate market uncertainty, with analysts pointing to strong cash flows, attractive valuations and rising profit margins. As gold prices stabilize above US$4,000 an ounce, mining stocks could offer investors both downside protection and long-term upside.
3 min
Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.
The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.
Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.
Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.
Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.
These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.
Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.
Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.
Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.
“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.
“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.
Miners are better businesses than they used to be, the BCA team added.
“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.
That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.
“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.
They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.
An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.
What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.
One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.
But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.
Australia’s market is on the move again, and not always where you’d expect. We’ve found the surprise suburbs where prices are climbing fastest.
Here’s how they are looking at artificial intelligence, interest rates and economic pressures.
