Weekly Market Recap

Business is back

15/03/2021

Week in review

Australia business confidence rose to highest in decade
Governor Lowe reinforces low for longer rates view
U.S. CPI inflation firmed to 1.7% y/y

Week ahead

U.S. retail sales
Australia labour market report and unemployment rate
RBA policy meeting minutes

Thought of the week

Business is back, or at least according to the results of the latest Australian business confidence survey. The business confidence and conditions indices rebounded in February. Business confidence hasn’t been this high since 2010. This index is highly correlated with domestic demand and points towards a strong start to economic activity in 2021. The sub-index on employment improved but the end of the JobKeeper scheme in March may slow the momentum in the labour market, at least temporarily. However, strong sentiment will be crucial as the economy further re-opens to push the unemployment rate down and drive inflation higher. There is still a strong need for greater levels of business investment, and rising capex intensions will be another key indicator to monitor. Certainly, the RBA are looking at greater business strength in the coming quarters in their assessment of the economy and the scope to increase interest rates.

Business confidence highest in more than a decade

Index

Source: FactSet, NAB, J.P. Morgan Asset Management. Data reflect most recently available as of 12/03/21.
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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