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January, 2018 4:55 AM


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Australian sharemarket monthly review

Australian sharemarket monthly review

By Expert Panel 09.10.2017

Global sharemarkets were generally firmer in September although Australia fell slightly. Investors focused on the international response to North Korea over the latter’s test of a hydrogen bomb as well as on-going tensions between the US and North Korea.

• Global sharemarkets were again mixed in September

• North Korean hydrogen bomb test

• Record run for US sharemarkets

• Australian markets falls as iron ore prices fall

Global sharemarkets were generally firmer in September although Australia fell slightly. Investors focussed on the international response to North Korea over the latter’s test of a hydrogen bomb as well as on-going tensions between the US and North Korea. US Federal Reserve policymakers delivered speeches and updated their economic projections. A number of hurricanes affected southern US states. And late in the month, elections in Germany and New Zealand were in focus.

Investors were cautious at the start of the month in response to the latest US employment data. Non-farm payrolls rose by 156,000 in August, short of forecasts for a gain of 180,000 jobs. And the jobless rate rose from 4.3 per cent to 4.4 per cent. Traders wound back expectations of a December rate hike, rating it a 39 per cent chance.

On September 4, Asian and European markets fell on news that North Korea had successfully tested a hydrogen bomb. US investors returned from a holiday on September 5 and similarly drove equities markets lower on the news from North Korea. The Dow Jones fell by 234 points or 1.1 per cent.

On September 6, US markets began to claw back losses, with investors heartened by news of a Congressional deal to avoid a government shutdown. European markets rose on September 7 after the European Central Bank made no changes to monetary policy settings.

On September 11, US sharemarkets rose on relief that damage caused to Florida by Hurricane Irma was not as bad as feared. The Dow rose by 260 points or 1.2 per cent.

The US Dow Jones rose for six straight days from September 12-19 with the Nasdaq down just one day over the period. On September 19, the US Dow Jones, S&P 500 index and Nasdaq all hit record highs.

US Federal Reserve policymakers left rates unchanged at the September 20 meeting but 11 of the 16 policymakers indicated support for a rate hike in December. The news drove financial stocks higher in the US.

It was a different story for Australian sharemarkets in mid-September. The ASX 200 index rose on only one of the seven trading sessions from September 13-21 as iron ore prices eased. Technology stocks in the US also lost ground late in September as investors mulled demand for new Apple devices.

German investors were relatively muted in response to the elections held on September 24. The Government was returned to power but will need to embrace new coalition partners. On September 27, US President Trump unveiled details of his tax reform package. After falling each day from September

21-26, easing 0.6 per cent, the US Dow Jones made up all gains in the last three days of the month, rising each day.

Originally published by Craig James, Chief Economist (Author), CommSec


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