The Australian market was modestly higher last week as the Reserve Bank of Australia left the cash rate on hold at 1.50%. The RBA reiterated its view that monetary policy remained accommodative and leaving rates unchanged in December was consistent with its desired economic outcomes over the medium term.
In economic news, third quarter GDP rose which pushed the annualised growth rate to 2.8%. The equity market was higher, but trade data was surprisingly weak for October. The October trade surplus recorded $105 million against the consensus of $1.5 billion. Exports dropped with most of the weakness attributed to falling iron ore prices and lower volumes of coal exports as China tightened its environmental controls. The best performing sector in the market was telecommunications, supported by Telstra with the regulator saying it would not oppose the merger of Foxtel and Fox Sports. Under the deal, News Corp will hold 65% of the new entity and Telstra will own 35%. The worst performing sectors were industrials, materials and health care. In company news, G8 Education was the worst performing company on the ASX 200 index after the childcare centre operator cut its earnings guidance for FY18 and said it expected conditions to remain challenging for the next 6-9 months.
In global markets, Wall Street was lower, influenced by developments including a probe into Russia’s alleged involvement in the U.S. election and progress on a tax bill in Congress. Investors seemed cautious about the Republican plan to slash corporate taxes and the impact of the proposed cuts ahead of lawmakers reconciling bills from the Senate and the House.
European markets were higher on a glimmer of hope in Brexit talks. Asian markets were lower as oil tumbled the most in two months on Wednesday. There was also some volatility as markets await China’s trade and inflation data.
The Australian dollar was lower against major global currencies again this week after a fall in the price of iron ore and weaker than expected economic data including third-quarter GDP and trade data. The Australian dollar fell close to US75c, the lowest level since June.