The Australian market was modestly higher last week but was largely unaffected by a weak September quarter CPI reading. The energy, information technology and consumer discretionary sectors were the best performers last week with energy companies boosted by a rise in crude oil prices breaking through US$52. Crude oil rose after Saudi Arabia’s Crown Prince indicated that the nation “will support anything to stabilise the oil demand and supply”. The worst performing sectors were industrials, consumer staples and financials. In company news, aged care provider Japara Healthcare was one of the best performers in the ASX 200 index after Moelis Australia acquired a 9.96% stake in the company. Qantas Airways was one of the worst performers after the carrier warned that revenue growth in its domestic business would slow in the second half of FY18 and its international division would face accelerating capacity growth by its competitors on key routes.
In global markets, Wall Street was mixed with the Dow Jones higher but the S&P 500 and the Nasdaq were lower toward the end of the week as investors digested a mixed batch of corporate earnings results. The fact that valuations are considered stretched has also caused investors to trade cautiously. The Senate passed a budget blueprint for next year, clearing the way for possible tax cuts and the House of Representatives also narrowly passed a budget bill which paves the way for the Senate to potentially pass a tax-reform package at some point.
European markets were mixed with the FTSE 100 lower as the British pound rose due to a more positive tone around Brexit talks at the EU summit.
Asian markets were mixed but the SSE Composite Index was higher as Xi Jinping was reelected as General Secretary and President of the People’s Republic of China for a second five-year term. Majority of the Standing Committee of the Politburo are now reformers which strengthen Xi’s position and lays a foundation for better implementation and the speeding up of reform.
The Australian dollar was lower against major global currencies this week and fell to more than a three-month low against the USD. Deputy RBA Governor Guy Debelle aided the weakness by saying that “the history of economic forecasting tells us that our central forecast will almost certainly be wrong”. The European Central Bank’s monetary policy decision moved the US Dollar higher which in turn helped push the AUD lower.