Key Data for the Week
Key economic data released this week:
The Australian sharemarket extended its winning streak to four straight sessions, as the index rose 0.9% yesterday, with all sectors closing higher. The Telecommunications sector saw the largest gains, with Telstra up 2.8%, after the company reaffirmed its FY20 guidance at an investor day.
The big four banks closed mostly higher; Commonwealth Bank led the gains, up 1.2%, ANZ lifted 0.5% and NAB eked out a 0.1% gain, while Westpac declined 0.2%.
Woolworths rose 1.3% following news chief executive Brad Banducci turned down a potential $2.6 million bonus after the supermarket giant underpaid 5,700 staff for years.
The Materials sector also had strong gains. Mining heavyweights BHP and Rio Tinto added 1.2% and 1.1% respectively, while gold miners St Barbara and Saracen Mineral jumped 4.4% and 3.0% respectively.
The Australian futures market points to a 0.26% rise today, being driven by stronger overseas markets.
European sharemarkets rose on Wednesday, with the broad based STOXX Europe 600 up 0.3%. Bank stocks saw gains; Lloyds Banking Group added 0.8%, while Deutsche Bank and ING Groep lifted 1.1% and 1.2% respectively.
US sharemarkets were also higher overnight. Information Technology stocks were amongst the best performers; Facebook added 1.5%, Apple rose 1.3% and Microsoft gained 0.2%. Financial services companies also saw strong gains; PayPal lifted 1.5%, Square and Visa both added 1.0% and MasterCard rose 0.8%. Alibaba shares rose 3.1% to extend this week’s gains. The company was recently listed on the Hong Kong stock exchange, which saw the stock rise over 6% on its opening day.
By the close of trade, the Dow Jones and S&P 500 both added 0.4%, while the NASDAQ lifted 1.3%.
Construction figures released yesterday by the Australian Bureau of Statistics unfortunately provide yet more indication of weakness in the economy over the past year.
Residential building fell 3.1% in the September quarter, marking its fifth straight decline. Over the year, residential building is down 10.6%, the biggest annual fall in 18 years.
While residential building continues to decline, this is not a major surprise, given a major rebalancing of supply and demand was to be expected, following the housing construction boom between 2012 and 2017.
As the construction industry is Australia’s third largest employer, with almost 1.2 million workers, or 9.1% of the total workforce, any prolonged deterioration in the sector will no doubt have ramifications throughout the economy, especially the labour market.
However, with a recent rebound in Sydney and Melbourne home prices and record low borrowing rates, hopefully a bottoming out in the construction sector is not that far away.
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