Australian Economy – The $A went into free fall with dovish comments from the RBA almost guaranteeing an impending rate cut. Though wage growth and inflation look benign at best, the healthy employment data1 for the month seemed to highlight the resilience of the overall economy.
Global Economy – A month full of major events, yet the global landscape still looks the same. The US economy continues to roll along well, despite some mixed data for the month2. Europe is ever on the edge of some cliff to oblivion, with Greece again becoming the top point of conversation. The election of the new Greek government was preceded by the ECB announcing their long awaited QE plans and also the de-pegging of the Swiss Franc. And China remains steady along its glide path to becoming a modern, developed economy.
Investment Markets – The better performers of 2014 seemed to give up some returns early in the year with the US and China both down around 3%3. Australia had good month, jumping up 3%3, but Europe was the best performer, helped by the beginning of their QE experiment.
Outlook – Domestically, the lower $A should be a support to our exporters and markets. Lower interest rates would also be welcome to help reverse the slowing economy. Globally, the hope will be for a quick resolution to the problem that is Greece and also for QE to revive the broader European recovery.
S&P/ASX 200 – 12 months to 31 January 2015
Source: Core Equity Services
Footnotes: 1. Data from Australian Bureau of Statistics; 2. Dept of Labour, USA; 3. Bloomberg data.