Originally published by Rivkin Securities
The two major US indices were down overnight while the Nasdaq 100 gave back early gains to close flat. Big tech names have had a rough week with Microsoft Corporation (NASDAQ:MSFT) down 4%, Netflix (NASDAQ:NFLX) down 7.3% and Facebook (NASDAQ:FB) down 5% since last Wednesday, although on a one-year timeframe, all of these stocks have made substantial gains.
On the economic data front, Australia had several important releases yesterday. First, retail sales data showed a 0.5% increase for the month of October which was above analyst expectations for an 0.3% increase. Many retailers are struggling in Australia and the official retail sales data for this year bears this out with a year to date increase of 1.5% which is just on par with the inflation rate. Next, Australia’s current account for the third quarter was slightly worse than expected at -$9.1bn. The current account has improved significantly in the past year as coal and iron ore exports have provided a significant boost to the number. Finally, the Reserve Bank made its interest rate decision and left rates unchanged as widely expected. Overall, the statement was not a surprise to the market with little changed from the prior month. Technically, the bank is retaining a ‘neutral bias’ meaning that it is neither signalling a future increase nor decrease in rates.
The Australian dollar climbed against the US dollar following the release of the stronger than expected retail sales data, although it gave back the gains 12 hours later during the US trading session. The Australian dollar continues to be weak having fallen around 5% from the September peak at around US$0.8. The Reserve Bank hopes that the weaker dollar will help Australian exporters as it makes exports cheaper to foreign buyers.
Data Releases:
- Australia 3rd Quarter GDP 11:30am AEDT