Weekly Market Recap

Week in review

U.S inflation falls to 6.4% y/y
Australian unemployment rate rises to 3.7%
Australia consumer confidence falls to 78.5

Week ahead

RBA minutes of monetary policy meeting
Eurozone and U.S. PMIs
Eurozone consumer confidence

Thought of the week

Australian businesses started the year on the right foot. Both business conditions and business confidence survey readings jumped in January. Of the two metrics, business conditions is more closely aligned with the health of the domestic economy and suggests only a gradual slowing in economic activity. The report showed that labour demand was still high as employment intentions picked up but was off from last year’s peak. The findings from survey suggests a gradual slowing of employment growth in the coming months. Something corroborated in the recent employment report. The other take away related to price pressures and the impact on inflation. Both purchase costs and final product price indices rose, going against the more recent runs of declines. The implication could be that the RBA is right when it thinks inflation will take longer to receded based on this survey data. However, with the sharp change in expectations for rates in Australia since the end of January, its difficult to say that businesses will remain as confident. .

Conditions still favourable for Australian business
Index

Source: FactSet, NAB, J.P. Morgan Asset Management.
Data reflect most recently available as of 17/02/23.
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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