Global shares rose to a two-month high on Friday night, thanks to the continuing belief that the US Federal Reserve won’t be lifting interest rates any time soon.
And our market is poised to continue that upbeat trend later this morning when trading resumes after a solid gain on the overnight futures market.
But this new confidence will be tested early this afternoon by the release of the final round of September and September quarter economic data from China, including GDP, industrial production, retail sales and investment figures.
Weak or unconvincing data could trigger another round of questioning about the health of the Chinese economy – although a 6.5% jump on the Shanghai market last week tells us domestic investors are regaining confidence
US production for September eased (but still rose in the September quarter) adding to the belief that American GDP could have slowed sharply in the quarter, which if that’s the case, would see the Fed even more hesitant to lift rates.
The dollar edged higher, boosted by views that the European Central Bank may provide more stimulus to the eurozone economy as inflation in the eurozone, the UK all edged into deflationary territory in September because of falling oil and gas prices.
Core inflation though edged a touch higher, especially in the US last month.
Oil prices rose on the day but fell on the week, gold fell on the day but rose on the week and copper was lower on the day and the week as the surge went out of commodities.
Although Australian shares ended down 0.2% for the week, US shares rose 0.9%, eurozone shares gained 0.1%, Japanese shares rose 0.8% and Chinese shares were up a strong 6.5%.
In fact, the Chinese share market is now up 16% from its late August low.
While shares did well, commodities were soft and bond yields fell as inflation remains (mostly) missing in action. The Aussie dollar fell slightly.
The S&P 500 switched between small gains and losses, but ended the day higher, rising 9.21 points, or 0.5%, to 2,033.07, the highest finish in two months.
The index was up 0.9% over the week, with most of the gains concentrated in defensive sectors such as utilities, health-care and telecoms (but not big retailers after the surprise downgrade from Wal-Mart).
The Dow added 74.09 points, or 0.4%, to settle at 17,215.84 and saw a 0.8% weekly gain. And the Nasdaq Composite ended the day up 16.59 points, or 0.3%, at 4,886.69 and finished up 1.2% by the end of the week.
Europe’s Stoxx 600 index index closed up 0.7% for the day, but was little changed over the week after the gain the week before.
On Friday, the ASX 200 finished the day 0.7% higher at 5268.2, briefly touching a seven-week high, but lost 0.2% over the week. The All Ordinaries index ended the day 0.7% higher at 7303.6, and just down a mere 0.1% for the week.
