Weekly Market Recap

Things are looking up

14/09/2020

Week in review

Business confidence rises for August
Consumer sentiment up in September
Housing finance increases by a strong at 8.9% m/m

Week ahead

Australia labour market report
U.S. Fed committee meeting
Bank of England policy meeting

Thought of the week

The impacts of the extended lockdown in Victoria are becoming more apparent in the stop-start nature of business and consumer sentiment. Both indicators rose in the latest month, but the details were less encouraging. Business confidence has moved away from the low earlier this year but it’s clear the second wave of COVID infections and the slowing recovery around the country are acting as constraints on corporate Australia. Worryingly, the employment intentions component of the survey fell back sharply, suggesting a higher unemployment rate to come. Meanwhile, consumer sentiment ticked up in the latest reading as fiscal supports to households has helped to support household finances. However, as we learned from last quarter’s national accounts, providing households will additional money doesn’t mean they will spend it, and the spending intentions of the survey remain at depressed levels.

Consumer sentiment and business confidence
Z-score

Source: FactSet, National Australia Bank, Wespac, 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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