Australian Economy – According to the Westpac-MI Leading Index report, the latest economic data is pointing to slower growth for Australia in 20191. This was backed up by the drop in GDP growth in the September quarter from 0.9% to 0.3%, which was the weakest growth in over 2 years. The unemployment rate ticked back up to 5.1% in November and inflation was a little more subdued at 1.9% for the September quarter1. The property industry continues to be in distress with property prices falling and construction activity slowing, however, mining production has been a bright spot for Australian economy.
Global Economy – Trump and congress delivered an unwelcome Christmas present to the 2.5 odd million US federal employees with a Government shutdown. And this is a time when there is beginning to be talk about a possible US recession in late 2019, and other economic troubles resulting from the ongoing US-China trade war. However, the Federal Reserve is not overly worried, raising interest rates up to 2.5% and signalling 2 further hikes in 2019.
Investment Markets – It was a horror month for stocks, with almost all markets finishing the year in the negative. The Australian stock market fared better than most, dropping only 0.4% in December. European and Chinese equities were both off over 5% for the month, whereas the US and Japan saw falls of over 9%2.
Outlook – Markets will hope for some respite in the new year, but this may depend on some of the larger issues facing global economies. Trade wars, Brexit and the Russia investigation continue to provide headaches for investors. Market participants will also be keeping an eye on further comments from the US Federal Reserve, perhaps with a hope that the current rate hiking cycle is near or at its end.
S&P/ASX 200 – 12 months to 31 December 2018
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .