Market Highlights - A look back at September 2016

Australian Economy – A strong consumption expenditure reading helped to keep Australia's GDP in positive territory for the 3 months ending June1. It has now been 25 years since our last official recession and we are within one year of taking out the record streak for a developed country, currently held by the Netherlands (1981-2008). If employment data is anything to go by, this record is in the bag, with businesses still showing confidence and the unemployment rate ticking down to 5.6% in August.

Global Economy – Another country with an impressive streak is the US. Its weekly jobless claims has now spent 81 weeks below 300,000 its best run of figures since 1970. By way of comparison, this figure hit almost 700,000 in 2008 and averaged well above 300,000 during most strong periods of growth over the past few decades. There was also some good news out from China last month, with the August purchasing managers index (PMI), which gives a good gauge of short-term activity, back up above the no-growth level of 503.

Investment Markets – Markets finished the month of September somewhat flat, despite the mild pick-up in volatility mid-month. Australian equities fared relatively well, finishing the month where they started. The US was slightly down whereas China, Japan and Europe were all off over 2%4.

Outlook – Following a poor showing by Trump in the first presidential debate, markets seem to be feeling a little more comfortable. However, disregarding the power of the Trump appeal has proved to be a mistake in the race to the White House, and you can be sure the Clinton campaign will not rest on its laurels. A killer blow is not likely to strike before election day, which will keep capital markets on edge for a month longer.

S&P/ASX 200 – 12 months to 30 September 2016

Source: Core Equity Services

Footnotes: 1. Australian Bureau of Statistics; 2. Dept of Labour, USA ; 3. National Bureau of Statistics of China; 4. Bloomberg data.

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