Market Highlights - A look back at July 2018

Australian Economy – The RBA has now left interest rates on hold at 1.5% for 2 years. The unemployment rate over the same time has remained steady in the 5.4 to 5.8% range1, and the Aussie dollar has hovered around the US 75c level. The recent past has seen inflation trending upwards above the 2% level, whilst wages have been a little more subdued.  

Global Economy – A 4.1% p.a quarterly GDP growth figure for the U.S. (1.03% p.q or 2.8% year-on-year)1 has seen its economy growing at its fastest pace since 2015, and could be seen as a good sign so late in the cycle. This was somewhat offset by slightly poorer employment data, with the jobless rate creeping back up to 4%. European growth has been markedly lower, with preliminary June quarter growth coming in at 0.3% per quarter (2.1% year-on-year)1.

Investment Markets – Most developed markets, with the exception of Hong Kong, had a buoyant start to the second half of 2018. Equities in Europe and the U.S. in particular enjoyed strong performance with both up over 3% for the month2. And this was despite a sell-off in the stocks of some of the bigger tech companies.

Outlook – Unfortunately, there is still little sign of a cooling down in the current tensions over tariffs. To the extent that the trade war is meant to be a smokescreen for the White House troubles over Russian interference and collusion, then the sooner the investigation is finalised the better. 

S&P/ASX 200 – 12 months to 30 July 2018

Source: Core Equity Services

Footnotes: 1. TradingEconomics; 2. Bloomberg data .

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