Australian Economy – With the downward trend in the unemployment rate continuing throughout 2017, the Reserve Bank of Australia once again left rates on hold at 2.5%. It's now been 12 month since the last couple of rate cuts and has been almost 7 years since rates were last lifted (from 4.5% to 4.75%)1.
Global Economy – The US unemployment rate touched back down to 4.3% whilst GDP growth for the June quarter came in above expectations at 3.0%2. Unfortunately for the US, this year's hurricane season is proving to be damaging with Hurricane Harvey alone expected to cost over $80 billion and drive up the price of petrol significantly.
Investment Markets – Australian equities have seen 3 months of unusually benign terrain, with the S&P/ASX200 index stuck just above 5700. The past month was also somewhat flat for US equities, though Chinese equities bounced up over 2% to be up almost 10% over the past 3 months3.
Outlook – A US bond rally in August might be a signal for an impending market correction. With equity markets losing faith in the Trump agenda, it might only take a one or two negative surprises for the current bull market to run out of steam.
S&P/ASX 200 – 12 months to 31 August 2017
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor; 3. Bloomberg data.
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