Australian Economy – Australia's GDP fall of 7% for the June quarter was of no real surprise, but it did mean that Australia's run of over 28 years without a technical recession finally came to an end. On a more promising note, Australia's unemployment rate did improve significantly to 6.8%, with the labour participation rate also improving1. One reading does not make a trend, but there is a reasonable amount of hope that the economy might get back to normal sooner, rather than later.
Global Economy – As the clock ticks down to the US election, the US unemployment rate is also improving better than expected. Whether this will be enough to save the incumbent will be known very soon. Most other countries have also posted relatively good data over the past month, but, this of course is coming off of a low base1.
Investment Markets – September was a tougher month for the market, with the Covid bounceback taking a break. Australian and US equities were down 4% for the month, whilst Europe and Japan fared mildly better. Overall, the US market, led by its megacap stocks, is roughly 5% higher than where it started the year, while most other regions are still 10% adrift2.
Outlook – Other than the global pandemic, there are host of other big events that are likely to jolt the markets one way or another. The US election is an obvious one, but there is probably a more significant event due to play out over the next few months: The UK's final exit from the EU. There is still a host of sticking points to obtaining a reasonable trade deal between the UK and the EU, with the likelihood of "No Deal" increasing rapidly in odds.
S&P/ASX 200 – 12 months to 30 September 2020
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .