Also on Tuesday the Bureau of Statistics (ABS) releases estimates on home prices together with the latest Overseas Arrivals and Departures publication. While the latter report contains data on tourism arrivals and departures, it also includes longer-term flows of people such as migration. Importantly, not only are tourism arrivals at record highs but migration also continues to lift.
On Thursday the October jobs data is issued. In recent months there has been a progression of analysts seeking to deride the employment estimates, but the census figures show that they aren’t too far off the mark. We believe that employment rose by around 10,000 in October with the unemployment rate steady at 5.4%.
And on Friday the Reserve Bank issues its comprehensive quarterly assessment on the economy – the Statement on Monetary Policy. As always the Reserve Bank will be updating its economic growth and inflation forecasts. But also of interest will be any comments or analysis on the Aussie dollar. The relative firmness of the currency in relation to softer commodity prices is one of the considerations of Reserve Bank Board members when deciding whether interest rates need to be cut.
In the US, the week kicks off on Monday with the ISM services index and monthly employment index. Economists tip a modest easing in the services gauge to 54.7 in October from 55.1.
On Tuesday (Wednesday, AEST time) the US presidential election will dominate attention and it will be a focus of investor attention over Thursday and Friday locally as the election result is made known and digested.
Also on Tuesday the weekly retail sales data from Redbook Research and the International Council of Shopping Centres is released with weekly housing finance data on Wednesday together with consumer credit or lending figures.
On Thursday the September trade data is released together with the usual weekly jobless claims data. And on Friday, import and export price data is issued together with the consumer sentiment index for November and wholesale sales figures.
In China, key economic data for the October month is released on Friday, including figures on consumer and producer prices, retail sales, production and investment.
Sharemarket, interest rates, currencies and commodities
On November 1, 2007, the Australian sharemarket hit record highs. The bad news is that the market would need to lift by around 47% to return to those highs, and that goal appears some way off. The less bad news is that when measured in total return terms, the Australian sharemarket “only” needs to lift by around 20% to get back to all-time highs.
Clearly investors need to assess sharemarket performance in terms of total returns – share price appreciation including dividends. But this perspective also serves up a little more disappointment for Australian investors. Because the latest figures show that the total return index for the US Dow Jones hit record highs on October 5 and the index only needs to lift by just over 3% to return to the summit.
Given that the global financial crisis began in the US, it almost seems perverse that US sharemarket returns have outperformed those in other parts of the globe. Still, it all depends on your perspective. The Australian sharemarket rose more than most markets to reach the highs, so it has further to travel to return to the peak.
Further, cash investments in Australia have offered attractive returns in recent years, and have served to limit interest in shares. And on a longer perspective, returns on Australian shares have lifted 67% over the past eight years compared with growth of 61% for the US Dow Jones – showing the value of the phrase “it is the time in the market that matters, not market timing.”
Craig James is chief economist at CommSec.
