Australian Economy – Mixed data for the month of October with construction and new home sales providing a healthy picture against poor manufacturing and employment news1. Though the $A settled up a little for the month, ongoing falls in commodity prices continue to hurt our terms of trade and current account.
Global Economy – QE3 has officially come to an end, with the Federal Reserve confirming the cessation of asset purchases. A better than expected jump in jobs2, along with a rebound in consumer sentiment and industrial production, all point to signs of some further acceleration in the US economy. Despite better job growth across the European continent, manufacturing and production continued to struggle as the ECB started to venture into the business of money printing. And poor data out of China, including the ongoing deflation of property prices, continued to force economists to revise down the amount that China will contribute to global growth over the coming year.
Investment Markets – There was a decent bounce back in most markets after a poor September and early October. Australia and Hong Kong led the way, with returns over 4% for the month, but Europe lagged considerably, down over 3%3.
Outlook – The recent volatility in markets has started to make many investors wary, which has the potential to cause further sharp moves up or down. With rates on lower risk assets still remaining depressed, the incentive to move out of growth assets should continue to remain low, which should help to provide support in to any price corrections.
S&P/ASX 200 – 12 months to 31 October 2014
Source: Core Equity Services
Footnotes: 1. Data from Australian Bureau of Statistics; 2. Dept of Labour, USA; 3. Bloomberg data.