Australian Economy – Whilst the Australian economy seems to be recovering from the lows of 2020, data in October was not clear about how fast the rebound by be. Unemployment ticked back up a fraction, whilst business confidence remained in pessimistic territory. Consumer confidence and both manufacturing and services activity, on the other hand, moved firmly within growth territory1.
Global Economy – Most eyes were on the US election, with polls tightening moving into election day. On the economic front, US unemployment also improved, whilst across the Atlantic, the opposite was true, with EU and UK jobs number worsening. Covid-19 is still the main driver for economic activity, and a pre-winter spike in cases for the northern hemisphere will likely have significant economic impacts.
Investment Markets – There was a mixed bag for markets in October, with the best performing market being that of China (and Hong Kong). This was partially driven by the remarkable economic performance of China, which has easily recouped the lost production from February and March. Australia shares also fared well, up 2% where most other regions were in negative territory for the month2.
Outlook – Whilst the market has factored in minor post-election tensions, it will enjoy the greater certainty now that the race is over (for all intents and purposes). However, there is still a long list of unknowns regarding the main economic issue of the day, such as how bad will the winter spike be in the US and Europe, when will a vaccine be available, and how effective will it be?
S&P/ASX 200 – 12 months to 31 October 2020
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .