Weekly Market Recap
Asia Pacific
24/02/2020
Week in review
- Unemployment increases to 5.3%
- Global manufacturing surveys
- Japan’s economy shrinks -0.4% q/q
Week ahead
- Australian capital expenditure
- Australian private sector credit
- Chinese PMI manufacturing
Thought of the week
The weakness in the January labour market report caused a swift repricing in assets as expectations for a RBA rate cut rose. The detail of the report showed a rise in the number of people employed but a higher unemployment rate. A bigger increase in the estimate of the size of the population meant that a larger rise in employment is needed to keep the unemployment rate down. This is troubling in the near term in reducing spare capacity in the economy and creating inflation via higher wages. However, in the long run, the better demographic profile of Australian and a rising working age population is very much a point of strength. Looking ahead, the unemployment rate is likely to bounce around in the low fives.
A swing lower in the unemployment rate is unlikely
Source: ABS, FactSet, NAB, 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.