Australian Economy – Over the past year, the Australian economy grew at its lowest rate since the end of the dotcom bust. Growth was slower than during the Asian crisis of the 90s and as low as what we saw during the GFC. Unemployment tipped up a little to 5.3% in September and construction activity is still slowing (despite ultra-low interest rates). Australia's trade surplus, on the other hand remains the main bright light, with exports still near all-time highs1.
Global Economy – Despite a more dovish tone from the Federal Reserve, the US economy continues to move along steadily. GDP growth is down from its highs in 2015, but jobs growth of around 150,000 new jobs per month is still above the long-term average. Globally, however, growth is starting to look anaemic with the EU expected to start going backwards in the short-term and Chinese GDP growth to drop well below 6% p.a.1
Investment Markets – Market fear, as measured by the VIX, was somewhat subdued in September, though still well above calm conditions. This did see most markets perform well throughout the month, recovering some or all of the losses experienced in August. Europe and Japan saw the biggest gains, up 4% and 5% respectively2.
Outlook – Global economic growth is being tested by the likes of the ongoing trade kerfuffle and looking Brexit deadline. October is traditionally a tricky month for markets and the short-term might see a build-up of volatility as investors try and navigate the constantly changing environment.
S&P/ASX 200 – 12 months to 30 September 2019
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .