Economics This Week

The All Ords finished and extremely volatile week slightly higher than it left off on Friday last week at 5089 compared to 5072. As seems to be the case for the past few weeks the local share market just seems to be ‘jogging up and down on the spot’ not moving definitively in one direction or another.

However, resources stocks have been trending lower for the past few months, with even more concerns sparked on Tuesday when Swiss commodity firm Glencore began selling off assets in the wake of their 1st half loss of USD $676 million. But, shockingly (and hopefully not in the economic sense) this trend seems to be riven more by fundamentals rather than speculation with the stock prices following deteriorating commodity prices.

In contrast, retail sales data released this week show a 4.5% increase this week alone in an upward trend evident since the GFC. Yet, if every dark cloud has a silver lining it can also be said every bright cloud holds the potential for a downpour with most of this increase driven by demand for household goods which in turn has been fueled by the housing boom. While I’m no meteorologist (well, at least not professionally) the IMF has been suggesting that this boom may be coming to an end, further reinforced by the slowing price growth in the Sydney market the past few months.

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