Market Report with Paul Wareing - December 65, 2016

Written on the 6 December 2016

In Australia last week the third quarter capital spending report was weak which suggests the same will follow for business investment to be reported in this weeks GDP report. The most disappointing aspect of this was the lack of increase in non-mining investment which doesn't bode well for any rate rises in the near future. On a more positive note October retail sales were stronger than expected.

Oil prices surged 12% on the back of  surprisingly strong commitment from OPEC to cut production. In the US , the non-farm payrolls were pretty much on the mark further solidifying the likelihood of a Fed rate rise this month. As suggested last week, the Trump trades started attracting some profit taking.

Looking ahead , the heavy referendum poll defeat for constitutional change in Italy and the PM'S subsequent resignation will have investors eyes watching closely how this will play out.  Eurozone stability will once more be front and centre as this result will boost the anti-EU populist parties as they prepare for elections in 2017.

Locally it's a pretty quiet weak data wise with GDP the main focus and the RBA meeting on Tuesday but with little chance of a rate rise expect a fairly nondescript statement. GDP numbers could be interesting as some market commentators are looking at a negative number. I imagine we will see sluggish growth with first half figures flattering to deceive as they incorporate some lumpy public spending and an unexpected commodity price rally.

In summary, a lot of focus on Europe and how weak the Euro gets and a close analysis of Australian GDP figures will be the main market drivers.

Paul Wareing
Investment Adviser
Barclay Wells Ltd
41 Carnarvon St Broome
0411 809 104
paul@barclaywells.com

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