Weekly Market Recap

I feel good

19/04/2021

Week in review

Australian unemployment rate drops to 5.6%
U.S. headline inflation rises to 2.6% y/y
Australian consumer confidence up 6.2% m/m

Week ahead

RBA April meeting minutes
Australia March retail sales (preliminary)
U.S. and Eurozone April PMI manufacturing indices

Thought of the week

Consumer sentiment in Australia has rocketed to a level not seen in over a decade. The ending of JobKeeper and news of the delays to the vaccine roll-out were not enough to offset the positives of limited COVID cases and loosening of domestic restrictions. Below the surface the employment expectations and spending intentions in the survey did come back a little, but remain very strong. Household consumption accounts for more than half of real GDP in Australia and means the propensity for spending can have a powerful impact on growth. The overall strength in consumer confidence bodes well for the economic outlook if it does lead to a reduction in precautionary savings and greater levels of spending in the quarters ahead. There is also the potential that households opt to use excess savings to pay down debt. Some of the spending impulse has passed, given the earlier economic re-opening in Australia, and is reflected in the notable drop in the savings rate in 2020.

I feel good

Australian consumer confidence

Source: FactSet, Westpac, J.P. Morgan Asset Management. Data reflect most recently available as of 16/04/21.
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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