Australian Economy – We saw mostly weak data for the Australian economy in December, apart from a rise in retail sales and construction activity. Consumer confidence is sitting a a 5 month low, with the main business surveys showing similar feelings among employers. The scrapping of the debt ceiling might leave the door open for reckless spending by future Governments but does at least reduces the risk of a Government shutdown or default.
Global Economy – The US economy maintained its steady recovery through the end of 2013 with housing and jobs both continuing to improve. Along with the EU losing it's AAA credit rating from S&P, unemployment in Europe is still a major concern and, though it has stopped deteriorating, still remains at uncomfortably high levels. The same cannot be said for the UK, who has ran out of recession convincingly with almost all data showing strong economic growth. China's data is somewhat of a mix bag with reasonable retail sales and exports offsetting low factory output.
Investment Markets – Most markets had a fair end to the year, aided by late rally. Japan was the best performer of the developed markets, capping off a spectacular 2013 with a gain of 4% for December. China, however, ended the year almost 8% down from where it started, down 4.5% for the month alone.
Outlook – Most eyes at the moment is on the Federal Reserve and it's leadership transition. Heir-to-the-throne, Yellen, is seen as someone who will not switch of printing presses anytime soon, but the inevitability of such a move will be on most investor's minds for the next few months (and maybe years). Europe continues to stumble slowly towards centralisation, though the anti-Brussels movement is likely to continue to grow and cause political and social disruptions. After a great year for most markets, a reasonable correction would not be too much of a surprise.
S&P/ASX 200 – 12 months to 31 December 2013
Source: Core Equity Services