Market Wrap November 2019

06/12/2019
Posted in Wealth
06/12/2019 Level One

Markets

  • Market Performance – The ASX200 rose 3.3% in November.
  • Sector Performance – The top performing sector for November was the IT Sector returning 11.0% and the worst performing sector was the Financials Sector coming in at -2.0%.
  • Banks – The majority of the big 4 banks fell heavily during the month of November, Westpac -13.1%, NAB -9.5% and ANZ -9.5 all down. The exception was CBA which was up 2.8%.
  • Global – The S&P 500 rose 3.6% in November. The Shanghai Composite Index fell -1.95%.

 

Property

  • House Prices – National housing prices rose, up 1.5% in November. Sydney was up 2.3% and Melbourne was up 2.3%. The national average showed slight increase of 0.1% over the past twelve months.
  • Auctions – The last week of November saw auction volumes rising to 2,612 properties nationally. The auction clearance rate rose to 68.5%.
  • Rental Yields – Sydney recorded the lowest rental yields at 3.1% and the highest were in Darwin at 5.9% over the past 3 months. When expenses are deducted from this, the real yield is much lower.
  • Residential Approvals – October Residential Building Approvals were lower at 157,000 compared to September at 168,000. This represents a 23.6% decline from a year ago.

 

Economy

  • Interest Rates – UBS and Westpac’s Bill Evans expects two rate cuts early next year in 2020.
  • Bond Yield – The Australian 10-year Government bond yield fell slightly during the month of November to 1.04%.
  • Consumer Confidence Index – According to the Westpac Melbourne Institute the Consumer Confidence Index recovered to 4.5% over November.
  • Employment – Employment fell by 19,000 jobs in October. The unemployment rate increased to 5.3%. The participation rate fell slightly to 66.0%. Employment growth slowed to 2.0% on an annual basis, the worst since April 2017.
  • Exchange Rates – The Australian Dollar fell against the US Dollar to $0.676.
  • US – US jobs growth increased by 128,000 in October. The unemployment rate rose slightly to 3.6%.
  • PMI – The Manufacturing Purchasing Managers’ Index dropped slightly lower at 48.1 in November compared with 48.3 in October.

 

Comment

November was a good month for equity markets as both the local and US markets reached new highs.

Signs of tentative stabilisation in global growth were welcomed by the markets but it is still too soon to sound the all clear on how global growth will evolve as we move into 2020.

Having said that, markets are currently pricing in a recovery in global growth as opposed to a slowdown at this stage.

The US and China trade dispute will no doubt have a significant impact on this, and Trump will be looking to finalise some type of agreement before the next US election in November 2020.

On another note, the world is clearly changing at a rapid rate.

In November Mercedes Benz sold more cars in Australia than Holden.

Holden sold 2668 vehicles whereby Mercedes sold 3407 vehicles. Total sales of new vehicles for November amounted to 84,708.

This is down 9.8% from the number of sales in November 2018 and marks the 20th consecutive month of declining sales.

A clear sign our economy is struggling despite 3 recent interest rate cuts and the likelihood of more to come.

Sources: UBS, Westpac, ABS, US BLS, CoreLogic, BIS Oxford Economics.

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