Category: 3. Business

Inflation has climbed to 3.8% in the year to October, from 3.6% the month before, as Jim Chalmers flagged he could announce further energy bill subsidies for households in the upcoming midyear budget.

Electricity prices were 37% higher in the year to October, which the Australian Bureau of Statistics said mostly reflected the end of state government power bill rebates.

The ABS released its first “complete” monthly consumer price index, a milestone moment that will eventually see the more frequent inflation number supersede the quarterly figure.

It confirmed an unwelcome upswing in price pressures that has crimped hopes for more Reserve Bank interest rate cuts, and even raised the potential the next move could be up.

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Underlying inflation, which removes the impact of large, temporary price swings like in electricity prices, lifted from 3.2% in September to 3.3% in the year to October.

With cost of living still the number one issue facing voters, Chalmers said before the release of the latest inflation numbers that the government would decide in “the next few weeks” whether to extend household energy bill rebates beyond the end of this year.

The treasurer has perviously said there would be no major policy announcements in the midyear budget, due around 17 December, but in a Sky television interview opened the door to further electricity subsidies.

With the Coalition using parliamentary question time to hammer the government on energy prices, Chalmers said “we’ve been very clear and very upfront for some time now – this electricity bill relief is really important”.

“It is taking some of the edge off power prices for families and pensioners and people in our communities right around Australia.”

He repeated his mantra that energy rebates “won’t be a permanent feature of the budget” but left the door open to extending the measures beyond December.

“We’ll take a decision about that in the next few weeks.”

The March budget extended the commonwealth’s energy bill relief fund for six months, which gave another $150 to all households and about 1 million small businesses, split into two quarterly instalments.

The opposition leader, Sussan Ley, repeatedly dodged questions in a Wednesday morning interview over whether the Coalition supported extending the power bill subsidies.

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Binance and its founders, including billionaire Changpeng Zhao, are facing a lawsuit in the US accusing the company of helping send millions of dollars to US- designated terrorist organisations, including Hamas and Hezbollah.

The legal action against the world’s largest cryptocurrency platform was brought by US victims of the 7 October, 2023, attacks in Israel or their families.

It is poised to revive scrutiny of the firm’s practices just a few weeks after President Donald Trump pardoned Zhao, who had pleaded guilty in 2023 to charges related to money laundering.

Binance declined to comment on the litigation but said it complied “fully with internationally recognised sanctions laws”.

The lawsuit accuses the firm of knowingly facilitating the transfer of more than $1bn to and from accounts connected to organisations designated by the US as foreign terrorist groups and responsible for the 7 October attacks.

Those payments included $50m sent after the 7 October attacks and at least two transactions sent from the US, according to the lawsuit, which was filed in federal court in North Dakota.

Binance in November 2023 had pleaded guilty and agreed to pay more than $4bn in penalties to resolve charges of money laundering and sanctions violations brought by the US government.

At the time, it pledged to improve its anti-money laundering and sanctions compliance programmes as part of that agreement.

But even after the settlement, according to the lawsuit, the company maintained a policy to only screen funds for suspicious activity when customers tried to transfer money off the platform.

“By deliberately failing to monitor inbound funds, Binance ensured that terrorists and other criminals could deposit and shuffle enormous sums on the exchange with impunity,” , the complaint says.

It alleges that the company “intentionally structured itself as a refuge for illicit activity”.

“To this day, there is no indication that Binance has meaningfully altered its core business model,” the complaint says.

The families are seeking financial damages from the company to be determined in a jury trial.

In a statement, Binance said it had improved its compliance systems and that “illicit flows” represented a tiny fraction of the money traded on its platform.

“We remain steadfast in our commitment to working with regulators, law enforcement, and our users to protect the integrity of the global digital-asset ecosystem,” a spokesperson said in a statement.

The lawsuit follows controversy over Trump’s decision last month to pardon Zhao, also known as “CZ”, who had admitted he failed to maintain an effective anti-money laundering programme at Binance.

Trump, whose family has business ties to Zhao, subsequently claimed he had ” no idea” who Mr Zhao was, while acknowledging his sons’ involvement in the crypto industry.

In a letter to administration officials last month, top Democrats said they were concerned the pardon would encourage criminal activity, alleging that it signalled to “cryptocurrency executives and other white-collar criminals that they can commit crimes with impunity, so long as they enrich President Trump enough”.

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(Reuters) -Workday reported third-quarter subscription revenue in line with Wall Street ​estimates on Tuesday, signaling softer demand and ‌sending its shares down nearly 7% in extended trading.

The human resources ‌software provider’s fourth-quarter subscription revenue forecast was also barely above estimates, hit by sluggish demand from certain higher education customers that depend heavily on federal ⁠funding.

Workday competes with Oracle,‌ SAP and payroll providers such as Automatic Data Processing. Its customers include ‍United Airlines, Visa and FedEx.

In an uncertain economy, some customers are tightening spend on platforms like Workday as they ​reassess budgets and timing.

The company expects fourth-quarter subscription ‌revenue of about $2.36 billion, compared with analysts’ average estimate of $2.35 billion, according to data compiled by LSEG.

In the third quarter, the company’s revenue rose 12.6% to ⁠$2.43 billion, slightly ​beating estimates of $2.42 billion.​

Subscription revenue also rose 14.6% to $2.24 billion in the quarter ended ‍October 31,⁠ which came in line with estimates.

The company reported adjusted profit per share of $2.32 for ⁠the quarter, compared with an estimate of $2.18 per ‌share.

(Reporting by Jaspreet Singh in Bengaluru;‌ Editing by Alan Barona)

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AI bubble fears are getting louder. Stocks tied to artificial intelligence continue to rise, yet every earnings cycle brings intensifying anxiety, especially around Nvidia and US tech giants such as Microsoft, Alphabet and Meta. Investors are scanning every signal for the earliest sign that the boom could be starting to unwind. 

But they are looking in the wrong place. If the AI cycle is going to crack, the first signs will come from Asia. 

Today’s AI mania certainly resembles past tech bubbles. There is intense hype, generous venture funding and a clear divide between investors who see an unsustainable surge in spending and those who insist that this is real transformation, big enough to justify aggressive investment.

What is different this time is the location of the bottlenecks. The most constrained and most profitable links in the AI supply chain are now in Asia. High-bandwidth memory chips, advanced chip packaging and cutting-edge chipmaking capacity, all essential for powering AI models, are overwhelmingly concentrated in Korea and Taiwan.

SK Hynix and Samsung together produce about 80 per cent of the world’s high-bandwidth memory, while TSMC controls nearly three-quarters of the global contract chipmaking market. Also, unlike previous tech cycles, which were largely defined by software, the global AI boom depends critically on the supply of these physical components.

Take SK Hynix, the world leader in high-bandwidth memory, the ultrafast memory chips used to train and run large AI models. Nvidia’s most advanced AI chips rely heavily on these chips and each new generation requires more quantities of them. Last month, SK disclosed that its entire production of these chips had already been sold out until the end of 2026 with supply expected to remain tight compared with demand into 2027.

It is the same story at TSMC. Its advanced packaging technology that integrates Nvidia’s AI chips with large stacks of high-bandwidth memory chips has become essential to AI chip production. TSMC’s capacity for this technology remains in high demand with Nvidia alone reported to have secured more than 70 per cent of that capacity for this year.

Taken together with record earnings at Korean and Taiwanese chipmakers, it appears on the surface to be clear evidence of booming AI demand.

Yet in chip supply chains, unusually strong demand often signals a cycle peak, not lasting growth. Chip order backlogs typically form during periods of scarcity, as they did last year, when customers place far more orders than they actually need. Suppliers, seeing only the order log, interpret this as sustained demand and expand production capacity. But as supply normalises, those customers start to pull back, reducing or deferring the volumes previously committed to.

Global chip revenue is expected to grow just 15 per cent this year, according to IDC, a rate far below previous cycles of industry growth. That modest figure, given the scale of AI hype, signals that the current boom is concentrated in a narrow segment of the chip supply chain rather than the industry as a whole. That also makes any slowdown in AI growth easier to spot.

Meanwhile, the US tech groups leading the AI push, where bubble fears are loudest, are not where the real risk lies. Microsoft, Alphabet and Meta are spending aggressively on infrastructure for the technology, but AI is not their main profit driver. Their revenue bases remain diversified across advertising, cloud and productivity software. Operating margins do not depend on factory capacity utilisation. Capital spending can be redirected if the financial case for AI weakens.

That is not the case for Asia’s chipmakers. AI and high-performance computing-related products are now their main growth engines. At TSMC, for example, high-performance computing made up 57 per cent of net revenue in the third quarter. Because chipmaking depends on volume and carries heavy fixed costs, even moderate dips in demand can show up quickly in earnings.

This sensitivity is exactly why chipmakers’ data will matter so much in assessing the true state of AI demand going forward. It is one of the few places where results cannot be smoothed over with long-term product visions. AI may well reshape the economy, but its foundations remain tied to the realities of long-standing chip cycles.

june.yoon@ft.com