Robust labour force data in the United States put a spring in the step of Australia’s share market and pushed the greenback higher. However, a dip in US business spending intentions took the gloss off the good news, with Wall Street notching up only modest gains as it nudges an all-time high. The positive data continued to fuel speculation the United States Federal Reserve might soon taper its economic stimulus program.
Meanwhile, gold and oil prices took a hit in the wake of a six-month accord struck between six world powers and Iran. The agreement will see Iran roll back parts of its nuclear program in exchange for the loosening of some economic sanctions against the country. Resources companies such as BHP Billiton, Rio Tinto, Fortescue and Newcrest lost ground after the deal was announced.
Locally, the prospect of another interest rate cut propelled the big four banks higher. The Aussie dollar tumbled further to 90.77 US cents, its lowest point since early September, as the US dollar gained ground.
Goldman Sachs forecast signs of recovery in Australia’s non-mining sectors, with the support of fiscal loosening, an upswing in housing investment and stronger corporate earnings. Growth is anticipated to be patchy through 2014, with the investment bank predicting the lower Aussie dollar and improving global outlook would trigger stronger growth for the 2015 financial year.
^Michael, Practice Development Manager