Australian Economy – An encouraging reading on construction activity and a lowering of the unemployment rate1 might be signs that the economy has bottomed out. A boost in confidence from the removal of Abbott and the installing of a more centre-right PM might also be what is needed to lift the proverbial foot off the proverbial brakes.
Global Economy – Even with the unemployment rate hitting a 7 year low and job openings at a record high2, the U.S. Fed was still too cautious to hike interest rates from the floor. And though wages are strong and consumer spending is high, some cracks are beginning to show in the US economy growth story, with manufacturing taking a bit of a downturn in September. The picture from Europe and China is still no clearer, with good economic growth data offset by poor factory activity numbers.
Investment Markets – The markets were hit by a late scare from Glencore, the world's largest trader in commodities. This ended a dismal quarter for equity markets with most developed markets down over 7%. China was the worst performer, continuing the market slump which has seen a fall of over 36% in just 4 months (though in all fairness, this was on the back of a 124% rise the 12 months prior)3.
Outlook – With the Fed still to make up its mind on the speed and scope of interest rate rises, an air of uneasiness is likely to remain in the market. This may cause added volatility, but the usual market slowdown into Christmas may subdue any large price movements.
S&P/ASX 200 – 12 months to 30 September 2015
Source: Core Equity Services
Footnotes: 1. Data from Australian Bureau of Statistics; 2. Dept of Labour, USA; 3. Bloomberg data.