Oil supports markets whilst US consumers spend up
The strong rally in oil prices last week helped plump up markets. But perhaps the more significant news for markets was that data out of the US showed that personal inflation had picked up.
This is the strongest increase since the end of 2012. It indicates that strong employment numbers and increasing average hourly wages are beginning to flow through to the real economy, causing "slack" in the US economy to decrease.
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Published on 01 Mar 16
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The strong rally in oil prices last week helped plump up markets. But perhaps the more significant news for markets was that data out of the US showed that personal inflation had picked up.
This is the strongest increase since the end of 2012. It indicates that strong employment numbers and increasing average hourly wages are beginning to flow through to the real economy, causing "slack" in the US economy to decrease.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
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Markets climb as investors watch US healthcare bill
Duration 02:31
This is the strongest increase since the end of 2012. It indicates that strong employment numbers and increasing average hourly wages are beginning to flow through to the real economy, causing "slack" in the US economy to decrease.
This may be the wake-up call financial markets need to realize that the US and the world is not heading into recession.
Finance ministers and central bankers clashed at the recent G20 meeting over a number of issues – ranging from the need for global stimulus to negative interest rates.
There was also pressure on China to do more and to implement stimulus policy quicker.
Countries that have adopted negative rates were attacked as it is believed this policy is aimed at boosting demand through weakening currencies – a zero sum game for the global economy.
There are also fears that after G20, Japan may intervene in currency markets to weaken the YEN. With the G20 over, Japan no longer needs to be on its best behaviour and intervention in currency markets to weaken the YEN is now more likely. Any intervention will provide support for the Japanese stock market.
Here in Australia the increase in investment in Quarter 4 in Australia was much better than the fall in Quarter 3. The improvement suggests that GDP growth in Q4 may be stronger than previously thought.
The RBA has been waiting for investment to rise as this is the last piece of the puzzle signalling a stronger economy and reduces the likely hood of further rate cuts in Australia going forward.