The US stock market was much calmer this past week – with daily high-low ranges not exceeding 500 points! There were, however, still days such as Wednesday when the Dow Jones Industrial Average had violent swings and reversals and the cumulative intra-day moves (irrespective of sign) totaled much greater than this. Overall, however, after its biggest weekly loss since August 2015, the stock market had its best weekly gain since December 2011. With the US Dollar hitting a fresh 3-year low against a basket of major currencies, AUD/USD ended the week more than a cent higher, having at one point on Friday morning reached a 2-week best of 0.7985.
The NAB monthly business survey was released on Tuesday. The business conditions index jumped
6pts to a strong +19 index points, which is well above the long-run average of +5 index points. The
business confidence index also rose by 2pts to +12 index points, its highest level since April 2017.
Business conditions were solid to strong across all major industry groups with the exception of retail.
Wednesday’s Westpac survey of consumer confidence fell by 2.3% to 102.7 in February from 105.1 in
January. The bank noted, “The survey was conducted over the week of February 5-11. That week was
marked by a wave of volatility in global share markets. The Australian market, which was more stable
than most, still experienced some significant swings, being down a net 4.6% for the week while the US
market (S&P 500) was down by a net 7.2%... Extensive media coverage of these developments would
have unnerved respondents on two fronts – the impact on their own financial position and concerns
for general global stability. These concerns appear to have been acutely felt by retirees whose
confidence fell by 13.5%”.
The latest Labour Force figures were released Thursday. Employment increased 16,000 to 12,453,500.
Full-time employment decreased 49,800 to 8,460,900 and part-time employment increased 65,900 to
3,992,600. Since January 2017, full-time employment has increased by 293,200 persons, while part-
time employment has increased by 110,100 persons. Seasonally adjusted monthly hours worked in all
jobs decreased by 24.1 million hours (or 1.4%) between December 2017 and January 2018 to 1,708.2
million hours. This follows a decrease of 8.6 million hours (or 0.5%) from November to December
2017, and four consecutive increases up to November. The average number of hours worked per
employee per week fell to a new record low of 31.7. Employees are on average working 2.7% fewer
hours than a year ago and that will limit the boost to household incomes from rising employment.
CBA have changed their interest rate forecasts to remove the two hikes they previously had penciled-
in for 2018, though at the other end of the spectrum, NAB still has two 25bp hikes in its forecast
profile for H2 2018. The AUD ended the week just over a cent higher at USD0.7910, with AUD/NZD at
1.0705 and GBP/AUD1.7750.