Australian Economy – A massive jump in jobs had most commentators questioning the accuracy of the ABS data, with many taking the record 121,000 increase1 in employment with a grain of salt and as correction to August's disappointing numbers. A dip in the iron price below $US80 per tonne has not slowed GDP growth down too far with the 0.5%1 increase for the March quarter seemingly showing the resilience of the overall economy.
Global Economy – The Fed confirmed what everyone knew, in that the latest round of quantitative easing would be coming to an end in October. This comes as job growth continues to strengthen2, dragging up consumer sentiment. As Europe and the UK dealt with the ramifications of a possible vote for independence in Scotland, most of the data out for the month was slightly positive, though inconsistent. A reasonably good month for the Chinese economy was soured with the start of protests in Hong Kong over democratic reforms.
Investment Markets – The Hong Kong exchange was hit hard by the student protests, whilst a correction in developed world markets began to take hold. Australian equities were down by almost 6%, whilst the US was down about 1.5%. Chinese and Japanese markets shrugged of concerns over prices, both up almost 5% for the month3.
Outlook – After a strong showing from the start of 2014, many of the developed world equity markets look as though they are heading for a sizable correction. This is at the same time that many of the emerging market stocks are seeing their 2014 gains extended. All eyes will likely start to shift to the European Central Bank, with investors hoping that the ECB can pick up the QE ball and run hard with it, now that the Fed has officially finished the asset purchase program.
S&P/ASX 200 – 12 months to 30 September 2014
Source: Core Equity Services
Footnotes: 1. Data from Australian Bureau of Statistics; 2. Dept of Labour, USA; 3. Bloomberg data.