Australian Economy – Business confidence (NAB survey) was up a little bit into February, but remained below the long-term average. The unemployment rate released in February also improved, with the economy adding another 39,000 jobs. However, overall activity seems to be slowing with the Westpac-MI Leading Index indicating below trend growth for the foreseeable future1.
Global Economy – Trump-related investigations and the impending Brexit deadline are taking up most of the market headspace. Even though US business confidence has fallen sharply over the recent past, the US economy is running along well with strong job creation and wages growth remaining above 4%1. Across the Pacific, the slowing Chinese economy is of major concern with GDP growth and inflation falling.
Investment Markets – February was another good bounce-back month for equities, with most markets experiencing strong price gains. Since the start of the year, most markets are up about 10%. The main exception to this is the Chinese stock market, which has seen gains of over 20% since December2.
Outlook – Equity markets have regained confidence following remarks by central bankers and other authorities around the word regarding possible stimulus measures or looser policy settings. Of course, such measures are only really needed if economies and businesses are struggling so the market seems to be betting that any stimulus measures will be able to ward of any serious economic downturn.
S&P/ASX 200 – 12 months to 28 February 2019
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .