Australian Economy – The lead up to Christmas saw a number of worrying data points released regarding the Australian economy. Factory activity saw contraction, whist job advertisements continued to fall1. The bushfire crisis will only worsen short-term economic figures, although a bounce-back might be expected in the middle of the new year.
Global Economy – Markets got the Christmas present that they were hoping for with the US and China reaching a preliminary accord on ending the trade war. They also received a surprise present with the emphatic win by the Tories in the UK ending much of the uncertainty regarding Brexit.
Investment Markets – The easing trade tensions between the US and China saw most markets rally well in December. As expected, the best performers were the Shanghai and Hong Kong markets, both up about 7%. Developed markets were up around 2%, except for Australia, which finished the month down over 2%2.
Outlook – With some of the bigger geopolitical unknowns being somewhat resolved over the past month, market attention will naturally flow back to fundamentals. Share price levels are still likely to require steady growth in corporate earnings and any threat to these might cause concern for market participants.
S&P/ASX 200 – 12 months to 31 December 2019
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .