Key Data for the Week
Key economic data released this week:
The Australian sharemarket closed lower yesterday, led by losses among Information Technology stocks, as only three sectors managed to end the session higher.
The Telecommunications sector was a standout performer for the second consecutive session, rising 2.6%, boosted by another strong performance by Telstra, which climbed 3.1%.
Despite the launch of Amazon’s new Australian website, a better than expected retail sales result for October, led Consumer Discretionary stocks higher, with retailers JB Hi-Fi and Harvey Norman closing up 6.8% and 6.2% respectively.
The Australian futures market points to a 0.54% fall today, following the lead of weaker overseas markets last night.
European sharemarkets fell on Tuesday, led lower by cyclical stocks. Dwindling enthusiasm over the US tax bill weighed on financial services providers, with US banks expected to benefit more than their European peers. The German DAX slipped 0.1%, while the broad based STOXX Europe 600 and UK FTSE 100 both slid 0.2%.
US sharemarkets also closed lower on Tuesday, as investors digested changes to the Senate's version of the US tax bill and assessed the impact of proposed tax cuts. Technology stocks recovered some of their losses from the two previous sessions, as Alphabet, Facebook and Microsoft each closed 0.8% higher. At the close of trade, the Dow Jones had lost 0.5%, while the S&P 500 and NASDAQ slipped 0.4% and 0.2% respectively.
The RBA left the cash rate on hold yesterday, as widely expected.
It has been sixteen consecutive months since the RBA last touched the interest rate lever, and although they sounded relatively upbeat about the Australian economy, financial markets still believe they won’t touch the lever again for some time.
Markets are predicting the RBA will join other central banks in raising the benchmark interest rate late next year. If it does happen, it will be the first rate increase in Australia since October 2010.
Any talk of a future rise in rates will be largely determined by a lift in inflation, which the RBA are hoping will pick up as the economy strengthens, although they acknowledge wages growth remains low “and likely to continue for a while yet”. Wages growth is an important influence on the overall inflation outlook and “the outlook for household consumption is a continuing source of uncertainty”.
GDP is announced today, and will provide us some comfort as to whether the RBA is on the right track or not.
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