Want to know the stories behind the numbers? We had Chris talk us through the latest market activity and what’s on the horizon:
After officially slipping into its first recession in almost three decades over the June 2020 quarter, the Australian economy is on the mend.
While official figures are yet to be released, Guy Debelle, the deputy governor of the Reserve Bank of Australia (RBA), told a Senate estimates hearing in October 2020 that it appeared the Australian economy grew through the September quarter.
This news was reflected in the findings of the latest NAB Monthly Business Survey. Conducted in October 2020, the survey found business confidence has risen to its highest level since mid-2019.
This was driven by the easing of the Victorian lockdowns, with confidence in industries including construction, personal services, and recreational services also increasing.
To further spur the recovery, the RBA announced a cut to the cash rate target on the first Tuesday in November 2020; it was reduced from 0.25 per cent to an historic low of 0.1 per cent. At the same time the RBA also announced a range of other measures to support job creation and the recovery of the Australian economy from the pandemic.
While this is good news for homeowners with a variable mortgage, Chris added that it’s also good news for businesses.
“If you’re a company with debt and your debt is now cheaper, the cut means you can pay down that debt quicker, or it can free up capital to do other things, whether it’s buying equipment or hiring more staff,” Chris explained.
Though investors had already priced in the likelihood of a victory for Democrat Joe Biden in the US Presidential election, the calling of the race over the weekend of 7 November 2020 saw markets globally rise in response to the news.
Australia’s S&P/ASX 200 hit 6,303.1 points on Monday 9 November 2020, its highest point since early March 2020.
With the number of daily COVID-19 cases across the US hitting all-time highs in the days following the election, one of Biden’s first actions as President-elect was to announce a COVID-19 working group. This group has been tasked with developing a pandemic response that will be put in motion assuming Biden is inaugurated on 20 January 2021.