Weekly Market Recap

Week in review

Australia real GDP 3Q 0.4% q/q and 1.7% y/y
RBA keeps rates on hold at 0.75%
U.S. PMI services 51.6

Week ahead

UK general election
U.S. Federal Reserve rate decision
Australia retail sales

Thought of the week

Renewed fears about the timing of a China – U.S. trade deal rattled markets last week, but signs of economic improvement continued to show through. The fear this year was that the contagion from the contraction in the manufacturing cycle would feed into the services sector and weigh on employment. The PMI for services had been on a downward trend and was a reason that recession risks were rising. The November update to the global services PMI showed an uptick to the employment sub-index. This is not enough to reverse the risks around a global slowdown, but does reaffirm views that global growth may be higher in 2020 than it was this year. However, trade remains the wild card as was clearly evident last week.

Employment in services still a worry, but not as much

Sub-indices for PMI services

Source: Markit, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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