Making sense of the markets – Tuesday, 6th September
The current volatility is not unexpected. We have said previously we expect markets to remain volatile in the short-term for the following reasons;
- US debt and economic management not clear
- The European debt situation remaining unresolved
- Geopolitical tensions around the world, particularly the Middle East and Africa, and
- Slowing of global growth
Current state of play
The US market closed lower last week following some disappointing US jobs numbers, and heightened concern about the European debt crisis after officials pulled out of the Greek debt talks.
The US unemployment rate remained unchanged at 9.1%, but, as usual the devil's in the detail. Market consensus was looking for a 70,000 increase in August's non-farm payrolls report and the actual release came in flat, or zero. Private payrolls posted a 17,000 increase, but this was negated by 17,000 government job losses. The jobs data was the weakest since September 2010.
The Australian market opened lower yesterday and closed more than 2% down. The S&P/ASX200 lost 2.38% yesterday and is now at 4,142, and the All Ords was down 2.25% to 4,224. It was expected to fall again today (Tuesday) following the severe drops in Europe overnight.
European markets took a tumble last night with renewed worries about the euro-zone debt crisis and global growth caused investor concern. The Germany’s DAX fell 5.275% and FTSE was down 3.58%.
The US market was closed yesterday (Monday) for Labor Day. However, last Friday the US market fell with the S&P500 Index posting its biggest monthly decline in more than a year. The S&P 500 fell about 2.5%.
Westpac said today that the slowdown in business activity is not confined to North Atlantic economies. Survey data out of the major emerging markets indicates momentum is also weak. China, Korea, India and Brazil are all well below long-run average levels. The implication is that Westpac’s forecast for world growth in 2012 is 3.5%.
Gold was up at US $1901.80. And the Australian dollar is slightly lower at $1.05.
The RBA is expected to leave interest rates unchanged when it meets later today.
You might also like:
Keep an eye on the bigger picture
It's a volatile time in the markets. Listen to our experts talk about what's happening, including BT Financial Group's long-time chief economist Chris Caton in our television advertisement.
Webcast
BT’s Head of Super Melanie Evans talks about embracing the long-term with your super
Get Financial Advice
No one is an expert on everything. When it comes to the most important things in life, good advice can be a good investment. Find out more about financial advice - where to go, what to ask, and what to expect.
