THE WEEK IN MARKETS: Confidence flies high

The much anticipated change of government helped push markets to five-year highs and consumer confidence levels to three-year highs. For the week, the ASX 200 gained 77 points to push the index up 1.5 per cent.

Confidence on the up

Consumer confidence is finally improving, with the September reading coming in 4.7 per cent higher than the previous month. The consumer confidence reading now sits at 110.6 suggesting there are more optimists than pessimists about economic conditions.

Retailers will be hoping the improved measure equates to consumers opening their wallets at the checkout. It will be some time yet before confidence levels impact balance sheets, but it is looking increasingly promising for retailers.

Business confidence had a nine-point turnaround to close out August at plus six points, up from minus three in July. The index is now at its highest level since May 2011.

Increasing confidence levels suggest lower interest rates are finally gaining traction. The expectation of a change of government has also impacted both measures.

The Australian dollar

Strong data from China and waning fears the US would take military action against Syria sent the Australian dollar up over 93 cents on Wednesday to reach three-month highs. Adding extra support to the dollar was consumer confidence data.

Gains for the local currency were relatively short-lived, with the jobless rate hitting a four-year high on Thursday, sending the dollar below 93 cents once again.

At 4:35pm the dollar was trading at US$0.9238.

Qantas soars

Qantas closed out the week gaining 9.8 per cent.

The market welcomed Qantas’ plans to add Western Australia to its existing state government tourism authorities. Qantas’ agreement with Tourism Australia has ended, allowing the airliner freedom to partner with other organisations.

Existing and planned measures to deliver value span out over the next two years, but are having an impact on Qantas’ share price today. Specifically, the Emirates deal is expected to be a positive earnings catalyst in the 2015 financial year and is catching the eye of investors as they become more familiar with the relationship. In addition to this, retiring the aging 767 fleet over the next 18 months will equate to material operating costs improvements.

With the risk of military action against Syria abating, oil prices have trended downwards eliminating any immediate concerns about rising fuel costs.

Investors are feeling bullish about the airliner, pushing the stock up 21 per cent from August lows.