Australian Economy – A better than expected fall in the trade deficit and strong employment data continued to show a relatively stable economic picture1. In spite of this, the RBA has continued its march into the world of ultra-low interest rates, primarily on the back of flat growth in prices.
Global Economy – While some developed countries continue to struggle with high unemployment (especially Southern Europe), most of the bigger economies of the world are hovering closer to full employment. The US economy added another 255,000 jobs in July with their unemployment rate at 4.9%3. The UK (5%), Germany (4.2%) and Japan (3.0%) also are enjoying near full employment, though there remains concerns about the quality of employment picture, especially for the global middle class.
Investment Markets – August was a reasonably flat month for most markets, with the volatility for the month following the Brexit vote subsiding. Chinese shares were the best performers (up about 4%), however, Australian markets took a bit of a hit as earnings reporting season failed to impress.4.
Outlook – Trying to look past the circus that is the US elections is proving to be difficult for markets. Though, there is a growing concern of what a Trump presidency may look like, there is good reason to believe that the US president is likely to have a very hard time implementing any preferred policy (just ask President Obama). Regardless, markets don't like the unknown, and right now, there are a lot of unknown pieces rattling around the global geopolitical puzzle.
S&P/ASX 200 – 12 months to 31 August 2016
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. Westpac-Melbourne Institute; 3. Dept of Labour, USA; 4. Bloomberg data.