Australian Economy – The RBA surprised again on Melbourne Cup day, this time suppressing the urge to loosen rates another 25bps. Their job hasn't been helped much by the stream of mixed signals coming from the economy. This month saw stronger employment figures and higher consumer confidence, but slowing mining growth and low resource prices have raised concerns that Australia's main economic engine may be running out of steam.
Global Economy – Debt problems continue to plague the West with the "will they, won't they" game being played in the US over their fiscal cliff taking centre stage. The troika also kept us wondering about Greece for a few weeks, but managed to come up with some more kicking-the-can solutions. The shift of leaders in China has seemingly gone well, with not too many concerns raised about the new regime as of yet, and most expected further stimulus and reform.
Investment Markets – Australian and US markets pared back early losses to finish flat for the month, whilst the falling Yen helped the Nikkei run up almost 6%. China continues to underperform and markets reversed over 5% in a month that saw the transition to a new regime commence.
Outlook – Volatility is expected in the short-term and could intensify should the US fail to resolve their 'fiscal cliff" issues. Ditto for Europe, though they're already taking a lot of their austerity medicine, and markets may be starting to predict a general loosening of the budget belt over the medium term. Hopes of a smooth transition for China seem to be well grounded, and local equity markets may respond well to added liquidity and Government stimulus.
S&P/ASX 200 – 12 months to 30 November 2012
Source: Core Equity Services