In this section, we look at the economic news affecting global markets this week.
- Housing credit grew by 0.5% in September. The annual rate is 6.6%. Investor lending growth is slowing. Owner-occupier credit growth is stable. The slowing in housing credit has come on the back of new APRA lending requirements. New home sales continue to fall. Numbers dropped another 6.1% in September according to HIA. New detached house sales fell 4.5%. New sales of units fell 16.7%. Stamp duty surcharges has made the Australian market less attractive to foreign investors. Also lending restrictions introduced by APRA has also contributed. Home price growth in the major cities has continued to slow on a quarterly basis.
- House prices in Australia flat lined in October with Sydney’s median dwelling value falling 0.5% to $905,917. It now joins Perth and Darwin as the only cities to fall. Melbourne rose 0.5% to $710,420.
- US 3Q GDP grew at 3.0% which beat expectations but was below the 3.1% in the previous quarter. The result did however show the economy’s resilience in the face of two hurricanes that cause widespread damage.
- Based on economic data, GDP is headed for a 4.5% annualized growth pace in the fourth quarter.
- Spanish markets continue to underperform as the constitutional crisis lingers. Spain on Friday sacked Catalonia’s regional government, dissolved the Catalan parliament and called a snap election on December 21. As expected, hundreds of thousands attended a mass rally for Spanish unity in Barcelona after Catalonia was stripped of its autonomy for declaring independence.
- Euro zone inflation could be higher than expected after the ECB’s survey of professional forecasters showed inflation could rise by 1.9% by 2022 which is in line with its target and above the 1.8% predicted.
- The European Commission has warned Italy, France, Portugal and Belgium that their 2018 draft budget plans may not meet EU debt and deficit reduction targets.
- China’s manufacturing sector grew at softer rate in October as the government began a major crackdown on air pollution, as steel production halted over the winter. The Chinese PMI was worse than expected in October. It came in at 51.6 which was below an expected 52.0.
- The Caixin China manufacturing PMI is 51.0 for October, meeting expectations of 51.0 for October. The result was unchanged from September. China’s economic data has been showing robust growth this year.
- The Bank of Japan has kept its monetary stimulus program unchanged even though inflation is well below its 2%. Japan’s economy is on track for the longest expansion in 16 years.
- The Bank of England has voted to hike interest rates for the first time since July 2007.