Originally published by Rivkin Securities
The Dow Jones Industrial Average fell during the first half of the trading session but recovered to close essentially flat. It was a similar story for the S&P 500 although it closed up 0.25%. Today actually marks nine years since the stock market low of the global financial crisis and the S&P 500 is up 300% since then. The S&P/ASX 200 had a strong rally yesterday, climbing 1.1% and futures are up three points this morning.
The RBA decided to keep rates unchanged at 1.5% at its monthly meeting yesterday. Although it stated it has no immediate plans to change rates, Governor Lowe stated that the next move will most likely be up rather than down. The RBA is concerned about soft wages growth that it expects will keep a lid on inflation in at least the short term. Markets don’t currently expect a rate hike anytime this year although making economic predictions that far into the future is notoriously difficult.
Yesterday, Australia’s retail sales and current account both disappointed on the low side. Retail sales grew at just 0.1% for the month of January, substantially lower that the 0.4% growth expected. Ever since the very strong growth of November last year, the data has disappointed in both December and January. Furthermore, the current account showed a deficit of $14bn, worse than the forecast $12.3bn deficit. Australia’s GDP for the fourth quarter of 2017 will be released today. The forecast is for an 0.5% q/q increase which would be below the RBA’s expected 3.0% annual GDP growth going forward and also slightly below the prior quarter.
Data Releases:
- Australia GDP 11:30am AEDT