Australian Economy – Fair employment numbers continue to highlight a steady level of economic activity. The trade surplus hit an impressive $3.5b thanks to rallying commodity prices and steady production1. Running counter to this was the big drop in building approvals, down 2.5% in December and 13.2% in 2016.
Global Economy – Near-full employment in the US continues with employment increasing by 227,000 people in January and insurance claims hovering below 250,0002. February saw some evolution in the Trump presidency with his speech to congress and budget announcement overshadowed by allegations over Russia. Across in China, the second largest global economy, economic data remains in positive territory, with fears of a hard landing largely gone.
Investment Markets – A solid month for investment markets with most stock indices rising more than 2%. With confidence growing behind the Trump influence on the broader business community, US markets led the way (up almost 4%)3. Furthermore, year-on-year returns were exceptional with almost all markets seeing double-digit growth since February 2016.
Outlook – Markets so far seem to be ignoring the tumultuous start to the Trump presidency. Furthermore, concerns about Brexit and tensions over European elections do not seem to be having any significant effect on investor sentiment. And with indications from the Federal Reserve of steady increases to the US cash rate over the year (perhaps getting up to as high as 2% by 2018), investors might soon start to become a little more nervous.
S&P/ASX 200 – 12 months to 28 February 2017
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor; 3. Bloomberg data.