Market Highlights - A look back at December 2016

Australian Economy – Despite a good pick up in overall employment numbers, Australia's unemployment rate ticked up a fraction to 5.7%1. The downward trend in building approvals is now a growing concern even though the east coast construction boom is likely to continue for a little while longer yet.

Global Economy – The Fed followed through on the many signals it had sent and raised US interest rates to the range of 0.50-0.75%. This was on the back of years of strong employment growth, steadying wage growth and a drop in the unemployment rate to 4.6%2. There was also some good data out of China, with manufacturing activity continuing its expansive run higher.

Investment Markets – Apart from China and Hong Kong, December was a great month for equity markets. Australian and Japanese markets jumped up over 4%, whereas European markets were up almost 8%3. For the year, the US stock market was the developed market winner, up over 10%.

Outlook – As we look to welcome in the new leader of the free world, there seems to be a reasonable lull in market volatility. There are no obvious clouds on the near horizon, with many markets testing recent highs, however, complacency always seems to precede short-term hiccups.

S&P/ASX 200 – 12 months to 31 December 2016

Source: Core Equity Services

Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor ; 3. Bloomberg data.

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