The Australian sharemarket is down sharply today following an overnight global sell-down. Given the events of the last few weeks (and months), I have put together an article with my thoughts.
The key issues facing investors at the moment are threefold:
Government debt was again a factor weighing down the performance of the Australian sharemarket in July.
The All Ordinaries Index fell 3.4% to close the month at 4,500.50 points, marking a poor start to the new Financial Year. Global sharemarkets were all weaker in July with the Dow Jones Index falling 2.2%, the FTSE falling 2.2%, the Nikkei 225 falling 0.6%.
Click on the link below to access the latest NAB Residential Property Survey.
This report monitors residential property prices and growth forecasts for all major Australian Capital cities.
The Greek debt crisis played havoc on the Australian sharemarket in June, before recovering strongly on the last two trading days with news that Greece’s parliament passed a further round of austerity measures.
The All Ordinaries Index fell 2.7% to close June (and the 2010-11 financial year) at 4,659.80 points. I note that the All Ords was down as much as 5.5% during the month, before staging a strong late month recovery. For the full financial year, the All Ords had a positive 3.4% return.
Australian banks are likely to continue lowering their exposure to overseas funding markets, a senior member of Australia's central bank said today.
After relying largely on overseas markets to fund their operations in years past, Australian banks have been raising less of their wholesale funding from offshore than has matured over the past three or four years.
The total number of houses and apartments that started construction in the first quarter of 2011 rose 3.1% to a seasonally adjusted 39,578 from the fourth quarter of 2010.
The Australian Bureau of Statistics also said that the number of private-sector houses started in the first quarter fell 1.9% to 23,124 from the previous quarter.
The trend estimate for the total number of housing starts, which further smoothes the seasonally adjusted numbers, fell 1.9% to 38,570 from the fourth quarter.
An index of consumer sentiment fell 2.6% in June from May, marking the lowest reading in the index in two years.
The index fell to a reading of 101.2 points in June in seasonally adjusted terms from 103.9 points in May, compliers Westpac Banking Corp. and the Melbourne Institute said.
In annual terms, the consumer sentiment index fell 0.6% in June in seasonally adjusted terms. In trend terms, the index fell 0.9% in June compared with May, contributing to a 4.7% annual decline.
Latest ABS figures show that GDP, in seasonally adjusted volume terms, declined 1.2% in the March quarter 2011.
This is the largest quarterly fall in GDP since the March quarter 1991.
Flooding which began in late December 2010 combined with cyclones in both Queensland and Western Australian have had a significant impact on the March quarter activity.
Despite the fall in GDP volumes there was an increase of an increase of 0.3% in Real gross national income driven by an increase of 5.8% in the Terms of trade on the back of stronger commodity prices.
Sovereign European debt concerns re-emerged as an issue in May, pushing global markets into negative territory for the month.
The All Ordinaries Index fell 2.2% in May to close at 4,788.9 points. Global markets were all lower with the Dow Jones Index falling 1.9%, the FTSE falling 4.6%, the Hang Seng falling 0.2% and the Nikkei 225 falling 1.6%.
My analysis continues to point to a positive medium-term outlook for Australia. As a major exporter of commodities the global backdrop is supportive.
The economy shed jobs in April, surprising the market.
The number of employed fell 22,100 when the market was expecting a rise of 17,000 over the month, with a massive loss of 49,100 full-time jobs underscoring the surprising report.
Still, a silver lining was found in the unemployment rate, which remained at an as-expected seasonally adjusted 4.9% in April, the Australian Bureau of Statistics said.