The Australian market was modestly lower last week despite staging a comeback a few days after investors sought refuge in safe-haven assets on the back of the North Korean missile test. In economic news, better than expected readings were recorded for building approvals for July, construction work done was higher for the quarter and business investment for the June quarter looked good. On a sector level, the best performers were utilities, information technology and materials. The worst performing sectors were telecommunications, consumer discretionary and financials. The telecommunications sector was significantly lower thanks to the continuing decline of Vocus Group Limited and falls in the price of Chorus Limited following the release of its full year results. Furthermore, Telstra’s plan to securitize NBN payments were rejected by NBN Co putting pressure on the Telstra share price. One of the best performers in the ASX 200 index was Blackmores Limited after its full year results impressed investors despite net profit after tax falling 42% on the prior year in what the company described as a “rebalancing year”.

In global markets, Wall Street was higher, picking up gains mid-week on positive economic news. U.S. gross domestic product was revised higher for the second quarter. U.S. private sector job growth came in at a better than expected 237,000 jobs created in August. Consumer confidence strengthened in August and remains just below a 6 year high. Consumer spending increased in July which was helped by higher incomes and low inflation.

The Nasdaq posted a new record on the back of a rally in biotech shares. In politics, President Trump started his push for a tax overhaul, calling for a lower corporate tax rate and an easy to understand tax code that would create jobs and higher wages. European markets were mixed with the Dax index lower despite German inflation rising more than European markets were mixed with the Dax index lower despite German inflation rising more than expected in August (1.8%, up from 1.5% in July). Asian markets were higher and staged a recovery from heavy selling that came after a North Korean missile test.

European markets were mixed with the Dax index lower despite German inflation rising more than expected in August. Asian markets were higher and staged a recovery from heavy selling that came after a North Korean missile test over Japanese airspace rattled investors. Japanese Prime Minister Shinzo Abe called the missile test an “unprecedented, grave and serious threat that seriously damages peace and security in the region.”

The Australian dollar was mixed against major global currencies this week and was modestly higher against the U.S. dollar following commodity price strength and a better than expected business investment report.

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