AUSTRALIA GROWTH STUMBLES TO NEGATIVE TERRITORY

Australia's economy shrank 0.5 per cent in the September quarter compared to the previous quarter and annual GDP growth came in at a meagre 1.8%. Although two consecutive quarterly negative quarter results is the definition of the economy in "recession" and there is unlikely that will be the case, there is off course major discussions as to what is in store in 2017.
If we look at why the numbers fell, it was mainly due to fall in public capital spending, fall in net exports and fall in private building investments. 
We do not expect similar results in the December quarter. It is just a coincidence of negative results in a number of sectors converging to produce the resukts which unlikely will be the case in December. The results were worse than what the market was expecting and the Dollar took its toll. 
Also last week the European QE program was confirmed to continue albeit at a lower scale. From a mo nthly 80 billion euro program, the QE is now set to be at 60 billion euro level from April until at least end of December 2017. 
​Next week we will wrap up the last blog of the year with some insight into 2017 outlook as we see it. 

MARKET DATA

​
Australia Cash rate
Australia 90 day bank bill
Australia 10 y bond
US 10y Govt bond
AUD/USD
AUD/EUR
AUD/JPY
AUD/CNY
ASX 200
S&P 500
Dow Jones Industrial Average
Shanghai Composite
Brent Oil (USD per BBL)
Gold Spot (USD per oz)
Iron Ore

As at ​10-Dec
1.50
1.76
2.87
2.47
0.7459
0.7031
85.35
5.1465
5,560
2,259
19,756
3,232
54.33
1,159
78.89

​As at 3-Dec
1.50
1.76
2.86
2.38
0.7411
0.6940
84.47
5.1010
5,444
2,191
19,170
3,243
54.46
1,177
74.57