The Australian market was higher last week with the ASX 200 index climbing above 5,900 points, the highest level since May. The market was buoyed by a positive global growth picture, Wall Streets continued run of records and a mixed bag of company news. In economic news, the Australian economy added a solid 19,800 jobs in September and the unemployment rate fell to 5.5%. Minutes from the RBA’s October monetary policy meeting reiterated the housing, household debt and currency themes the central bank has been focused on of late. Market consensus is for interest rates to remain on hold for the foreseeable future. In markets news, all sectors were up with the best gains coming from utilities, consumer staples and financials.
Vocus Group was one of the best performers on the ASX 200 index following an upbeat AGM address from rival Telstra Corporation and comments by the Chairman that competition in the market will be formidable. Lendlease Group was one of the worst performers as investors reacted to a trading update that warned that first-half FY18 operating earnings from its Australian construction division would be down on a year ago.
In global markets, Wall Street was mostly higher with both the Dow Jones and the S&P 500 hitting new records on the back of a rally in the healthcare sector and after a batch of positive earnings reports were released. The Dow ended above 23,000 for the first time ever during the week as Wall Street marked the 30th anniversary of the 1987 crash. In economic news, the consumer price index was up primarily driven by higher energy prices.
European markets were mostly lower, weighed down by escalating political tensions in Spain with the central government demanding that Catalonia’s separatist leaders backtrack on their push for independence. UK’s consumer price index recorded 3.0% in September, up from 2.9% in the prior month. This creates some uncertainty over whether the Bank Of England will hike interest rates in the coming months given that the rising consumer price index is coupled with weak GDP growth and Brexit uncertainty.
Asian markets were mostly lower as investors focused on Chinese economic data and China’s 19th National Congress. China’s GDP growth for the third quarter recorded 6.8%YoY, modestly lower than the 6.9% recorded in the prior quarter. Chinese President Xi Jinping opened the Congress with a 3.5-hour speech highlighting a list of reforms and showcasing the power of the Communist Party. The new composition of the Party’s top leadership will be announced next week.
The Australian dollar was mixed against major global currencies this week and fell modestly against the U.S. dollar despite firm commodity prices and firm economic data out of China.