The US stock market experienced a remarkable week, with all three major indices reaching record highs. The Dow Jones Industrial Average closed above 45,000 for the first time, boosted by optimistic remarks from Federal Reserve Chair Jerome Powell. Powell emphasized the resilience of the US economy and progress made in tackling inflation.
The Australian stock market also reached a new record but faced challenges following a disappointing third-quarter GDP report. The Australian economy marked its twelfth consecutive quarter of growth, but the annual growth rate of 0.8% was the weakest since the 1990s recession, excluding the COVID-19 period. This lackluster performance raised concerns about the sustainability of the economic recovery in Australia.
Several key economic indicators were released in the US, painting a complex picture of the economy. The Institute for Supply Management's services purchasing managers' index (PMI) for November indicated a slowdown in the services sector. However, the Job Openings and Labor Turnover Survey (JOLTS) reported an increase in job openings, surpassing expectations. Initial jobless claims also rose, suggesting potential challenges in the labor market. Factory orders showed a slight rebound in October, while in China, the Caixin manufacturing PMI indicated a modest expansion in the manufacturing sector. These mixed signals from the US and Chinese economies have contributed to a cautious outlook among investors.
In the commodities market, crude oil prices rose following the announcement from OPEC+ that existing production cuts would be extended. Gold prices fell as investors weighed the implications of economic data on inflation and interest rates. Bitcoin reached a new all-time high before retreating, highlighting the ongoing interest and speculation surrounding digital assets. The volatility index (VIX) remained relatively calm despite fluctuations in traditional and digital asset markets.
Looking ahead, significant economic events are scheduled that could impact market sentiment. In Australia, the National Australia Bank (NAB) business confidence report and the Reserve Bank of Australia's (RBA) interest rate decision are anticipated. The RBA has maintained its official cash rate for eight consecutive meetings. In the US, the Consumer Price Index (CPI) report is expected, with modest increases in headline inflation anticipated. Core inflation is expected to remain steady. The European Central Bank (ECB) is also expected to announce an interest rate decision, with a potential cut to its deposit rate. These decisions are influenced by economic data and aim to support economic growth.
As the global economy continues to navigate through a complex landscape, investors remain vigilant, seeking opportunities while managing risks across traditional and digital asset markets. The interplay of growth, inflation, and monetary policy will shape market dynamics in the future.