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Fraser Jack, Roland Houghton
You’re listening to the Monday market highlights brought to you by Milford.
Good morning. It’s Monday, the sixth of September, and I’m rolling from Milford. The key economic data was the US non farm payrolls release, which materially disappointed compared to expectations. Total jobs added for August was 235,000. Compared to consensus estimates of 733,000. The key weakness came in the services sector, with leisure and hospitality, for example, seeing no month on month employment growth. The unemployment rate did however, come in line at 5.2%. The other key data point in this release is average hourly earnings which continues to accelerate increasing 0.6% month on month compared to 0.3% expected this takes full year wage inflation to 4.3%. However, if you analyze the previous month, the US is tracking at 7.4% annual wage inflation. dwelling prices in Australia continue to grind higher, albeit at a slower rate with national house prices at 1.5% month on month, taking annual growth to 18.4%. Over the past year, house prices have grown at almost 11 times faster than wages and affordability will likely become an issue again. Finally, Australian GDP exceeded expectations growing 0.7% quarter on quarter, taking full year GDP growth to 9.6%. Of course, annual numbers are inflated due to the impacts of COVID. Interestingly, over the past two years, GDP has only grown at 2.8% or 1.4% each year, a much more subdued level of growth. Turning to equities, there was a lot of index news flow as the epernay rate index, a closely followed global property index updated its constituents adding a number of Australian rates, the tin companies added to the index rallied 3% on average. On the back of the news however, I engaged in Abacus which are expected to be included but didn’t make the cut fell 2% and 6% respectively on the day. In addition, on Friday evening, s&p announced changes to the various Australian indices, which will come into effect on close of business on Friday the 17th of September, lifestyle communities Pinnacle investment sealink and thairo. All into the a six 200 with J education in rW holdings new x and whisk old resources exiting Virgin Money UK also moved up into the a six 100 with baarle and beach both exiting looking to the week ahead. PPI data in the US is released this week, with the market expecting 0.6% month on month growth slowing from 1% growth in July. Remember the PPI data tracks the average change over time in selling prices realized by domestic producers of goods and services. The RBA will have their monthly meeting tomorrow where they will announce any change to the official cash rate the three year bond yield target and also highlight their plans around tapering. Given the extent of the Australian lockdowns no changes are expected in the official cash rate nor the bond yield target and many economists are now expecting the RBA to walk back from their current tapering timetable, which was announced in July. We continue to closely monitor vaccination rates in Australia, particularly on the back of pm Scott Morrison’s comments where he highlighted international travel will be able to resume for states that have achieved an 80% vaccination rate for those aged 16 and older. The Australian Government also managed to get their hands on another 4 million Pfizer doses from the UK which will double the available vaccines for September. Thanks for listening. We’ll see you next week.