October Market Update 2017

The Pulse

  • Economic data released over the past month has continued to give investors optimism that the global economy is experiencing synchronised growth for the first time in many years.
  • Investor concern over tensions between the United States and North Korea has subsided.
  • Early economic indicators from the United States suggest that the recent hurricanes have not had a large impact on overall economic activity.
  • German elections returned Angela Merkel as Chancellor but her win was narrower than expected.
  • The Australian economy continues to show strong business conditions but consumers are reluctant to spend on anything except essential items.

Global economies

Equity markets posted strong returns in September as geopolitical tensions with North Korea subsided and investors focused on elections in Germany and Japan and the US Fed’s plans to begin shrinking its US$4.5 trillion balance sheet starting this month.

 

US

Despite some distortions in the economic data caused by recent hurricanes, most of the data in the US has continued to show relatively strong economic activity. Unemployment has fallen to new cyclical lows of 4.2%, and the uptrend in wages growth appears to have resumed with the most recent reading showing annual wages growth at close to 3%.

 

Europe

In the Eurozone, business, consumer and economic sentiment surveys all suggest that the economy continues to perform well. Recent industrial production and factory order data from Germany has confirmed that business activity in Germany is still strong despite the headwinds to German exporters from the stronger Euro.

 

China

Chinese data over the past month has continued to be somewhat mixed. The official government PMIs, which tend to measure activity levels at the larger Chinese manufacturing and non-manufacturing firms, both rose to the highest levels in several years, while the privately-commissioned surveys (which tend to measure small to mid-sized business activity) showed softer conditions.

 

Asia Region

In Japan, the Bank of Japan’s quarterly Tankan survey showed that both big and small Japanese manufacturers are the most confident about business conditions in a decade, helped by a weaker Yen and strong global demand.

 

Australia

In Australia, the strong business conditions are continuing to create relatively robust jobs growth. Employment grew more strongly than expected in August and, pleasingly, there has been a rebound in the number of full-time jobs which had lagged part-time job growth.  However, while businesses are enjoying strong conditions, consumers are not so optimistic with evidence of belt-tightening showing in recent retail sales figures, which have now declined for two months in a row.

 

The information contained in this Market Update is current as at 13/10/2017 and is prepared by GWM Adviser Services Limited ABN 96 002 071749 trading as ThreeSixty Research, registered office 105-153 Miller Street North Sydney NSW 2060. This company is a member of the National group of companies.

Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. 

Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.

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