Australian Economy – Some early signs of strength (unemployment rate dropping, business confidence high, house prices rebounding) were all but forgotten by the end of August with mining companies starting to signal a potential end to the boom. The likes of BHP, RIO, Woodside all signalled the scale back of expansion plans, with job cuts also being forecast. The AUD has remained stubbornly high and the RBA isn't flinching just yet, which does leave ammunition in the tank for an increase in competitiveness and stimulus to offset falls in mining exports.
Global Economy – Following the end of yet another Olympiad, focus has shifted firmly to China with a slowing of the developing giant seen to be the last piece in the global recession puzzle. The problems of Europe continue to weigh heavily on global confidence, but the US engine seems to be sputtering along relatively well. The meeting of the minds at this year's Jackson Hole summit failed to deliver any real insight as to how much further stimulus will be pushed through by the Fed and other Central banks.
Investment Markets – Positive returns of 1%-2% on light volume for most of the world markets. Europe eclipsed most for the month posting a return of almost 5%, but China's run of underperformance continued with over 5% lost on the main Shanghai index.
Outlook – The upcoming US election is likely to keep trading volumes low as traders weigh up the economic effects of another Obama Government versus the fear that nothing will really be that different under Romney. On the home front, most are now expecting the RBA to step in over the next few months, but that may leave them short of fire power should things get really bad (i.e. China grinds to a halt).
S&P/ASX 200 – 24 months to 31 August 2012
Source: Core Equity Services
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