Daily Market Commentary 6th October 2021

A slew of economic data, gave some confidence to markets and losses suffered in the previous day’s trade were wiped out. The RBA left interest rates unchanged and QE firmly in place, while the economic disaster of lock-downs and their impact remain in place. The devastating impact of lockdowns and restrictions across Australia allowed the RBA to continue their historically easy monetary policy. Australian Trade data was much better than expected, with a surplus of AUD $15.8 Billion, against an expected $10 Billion. The surge in exports, has been the silver lining in an otherwise weak economy, with energy demand and prices high. The commodity prices countered downward pressure from monetary policy and a rising reserve, with the AUD trading below 0.7300, while the NZD looks to regain 0.6950. NZ Business Confidence collapsed to minus seven, while dairy prices were flat, as they battle their own destructive lock-down.

The European and US share markets rebounded strongly after Mondays trading losses. Sentiment was higher as Services and Composite PMI data was slightly better than expected. The energy and food shortages in the UK and Europe are causing problems, with no solution forthcoming, as Oil broke above US$79/barrel. New Car Sales in the UK collapsed by 34.4%, while EU New Car Registrations contracted 25.7%, reflected massive supply issues. EU PPI hit 13.4%, confirming huge upward price pressures, which will translate into inflation, despite the lack of economic growth.

Local markets await the ‘woke’ RBNZ rate decision today, which was expected fight inflationary pressures and taper QE and even push a rate rise, but no other Central Bank has walked this path?