Local bourse looking for signs of boost in confidence
US treasuries fell for the first time in four weeks last week on bets lawmakers will end the partial shutdown in time to reach an accord on extending the federal debt limit.
The Australian benchmark S&P/ASX 200 Index shed 26.9 points on Friday to close at 5208 points, a 1.9 per cent loss for the week.
While analysts said investors were keen for a resolution to the US deadlock, more important were improvements to local business conditions and employment.
"The Reserve Bank has been hoping that there would be improvement in confidence after the change of government," ANZ economist Ivan Colhoun said.
"We had some strong readings from the AIG surveys last week, and the data out this week will hopefully show that conditions improved, particularly in manufacturing and retail sectors where they have been struggling," he said.
"If they improve, policy is working and things are getting better."
The National Australia Bank business confidence and conditions surveys will be released on Tuesday, with the Westpac consumer confidence survey out on Wednesday. Employment data will also be released on Thursday.
Mr Colhoun said the Australian market had been immune to the US fiscal crisis, but that would change if fighting between Republicans and Democrats continued past the October 17 debt ceiling deadline.
Kathy Lien, analyst at BK Asset Management, said the Australian dollar was likely to strengthen this week. "The Australian dollar ... appears poised for more gains on a technical basis but that will depend on the developments in Washington," she said.
Frequently Asked Questions about this Article…
Investors should watch National Australia Bank business confidence and conditions surveys (due Tuesday), the Westpac consumer confidence survey (due Wednesday), and the employment data (due Thursday). The article also notes recent strong readings from AIG surveys, which together can show whether local business conditions—especially in manufacturing and retail—are improving.
The Australian benchmark S&P/ASX 200 fell 26.9 points to close at 5,208, recording a 1.9% loss for the week. The decline indicates short-term weakness, and analysts are looking to upcoming local economic data for clues on whether business confidence and employment are recovering.
Yes. While the Australian market had been largely immune to the US fiscal crisis so far, ANZ economist Ivan Colhoun warned that ongoing fighting between Republicans and Democrats past the October 17 debt ceiling deadline could change that dynamic. The article also notes growing nervousness about an international impact from a US shutdown.
US treasuries fell for the first time in four weeks as markets bet lawmakers would end the partial shutdown and reach an accord to extend the federal debt limit. Movements in US treasuries matter because they reflect global risk sentiment and can influence currency moves and investor confidence internationally, including in Australia.
ANZ economist Ivan Colhoun said the Reserve Bank had been hoping for improved confidence after the change of government. He suggested that if business conditions—especially in manufacturing and retail—improve, it would indicate policy is working and that things are getting better.
The article highlights manufacturing and retail as sectors that have been struggling. Economists said upcoming data should show whether conditions in those sectors are improving, which would be a positive sign for overall business confidence.
Kathy Lien, an analyst at BK Asset Management, said the Australian dollar appeared poised for more gains on a technical basis, but any sustained strength would depend on developments in Washington related to the US fiscal situation.
The article suggests focusing on local economic indicators—business confidence surveys, consumer sentiment and employment—because improvements there would signal that policy measures are having an effect. At the same time, keep an eye on US fiscal developments, as a prolonged debt ceiling fight or government shutdown could spill over into Australian markets.
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