Australian Economy – A post-election surge in confidence has not been all that evident so far with only minor improvements in retail spending and a modest lift in inflation. Housing seems to be the main hope for the country, with many believing a bounce back in housing approvals will go some way in offsetting the fall in mining activities. Recent data seems to suggest that this hope may have some grounding with the 3 year contraction in construction looking as though it is set to reverse.
Global Economy – Consumer sentiment took a hit in the US as the world's largest economy dealt with the shutdown of the Federal government. But employment is still growing modestly and the housing market is pushing along strongly. Across the Atlantic, the UK economy is continuing a great 2013, led by a vibrant construction boom, whilst Europe continues to slowly improve. Spain has moved out of contraction, but employment is still a major concern across the trade bloc. Elsewhere, Chinese manufacturing was firmly back in growth and Japan's "Tankan Survey" was strong on the back of continued money printing.
Investment Markets – Most developed markets enjoyed another good month with Europe up over 6%, the US and Australia not too far behind. The main Asian markets were more subdued with both Japanese and Chinese equities retreating slightly.
Outlook – As highlighted above, a lot of the "good" data flowing through at the moment is housing related. Recoveries throughout most of the worst hit housing markets is well underway, with low interest rates helping to prop up the sector and overall economy. Whilst there are no broad concerns for another housing bubble-led crisis, it will be worth noting how central banks deal with signs of heat in their respective housing markets. Any quick drawback of the current stimulus (low interest rates/quantitative easing) is likely to have a significant downward effect on most markets worldwide.
S&P/ASX 200 – 12 months to 31 October 2013
Source: Core Equity Services