• A mixed week for equity markets with the US and Australian equity markets leading the way whilst European markets were flat and emerging markets were flat to lower.

• A strong start to US 3rd quarter reporting season with more than 80% beating profit forecasts thus far, calming fears that higher inflation and supply-chain problems would affect corporate.

MARKETS

• Westpac has updated its projections around price increases in the Australian property market for the remainder of 2021, with a 1.5% increase expected in this month alone. The bank expects a 22% increase for the year, but also expects additional tightening from regulators in order to attempt to slow the market down.
• In local stock news, Aristocrat Leisure has lobbed a $5 billion offer for gambling software provider Playtech. The offer is at a premium of about 50% to Playtech’s last closing price. Aristocrat will raise $1.3 billion through a new share offer to help fund the
• BHP produced less iron ore after WA’s covid border controls hampered the number of train drivers able to transport the commodity. Production fell 3% from the previous quarter and was down 4% from the same period last year. The company also raised their offer to buy all shares in Canadian copper and nickel miner Noront Resources.
• Tabcorp said its 1st quarter sales were down more than 7% due to virus restrictions. The closure of racing venues, pubs, and clubs has affected the wagering and media division the most. The company confirmed that the demerger of the lotteries and Keno arm was on track for next year and would cost up to $275 million.
• Private hospital operator Ramsay Healthcare noted that elective surgery in Sydney will be allowed from Monday, whilst virus concerns in Melbourne have seen a tightening of restrictions with only some elective surgery allowed. The company said the restrictions and costs of working in covid environment would affect earnings.
• Transurban says there are signs motorists will quickly return to toll roads in Sydney and Melbourne after restrictions hit their quarterly traffic numbers. In the 1st week of eased restrictions this month, the company’s Sydney toll roads had their most traffic since late June, but traffic was still down 11% on 2019 levels.

ECONOMICS

• Australian household income grew over the 3rd quarter with a strong lift in government benefits supporting income during extended lockdowns in both NSW and Spending in the quarter lifted for the younger generations but contracted for all other age cohorts, whilst household savings have risen the most for the younger generations over the pandemic period.
• Spending by Australians last week was 16% higher than the same week in 2019, and up strongly from the week before, showing the pent-up demand for consumption following the reduction in lockdown restrictions. The spending rebound was the most prominent in NSW, with spending rising back to levels that existed just before the The same sharp increase will also likely occur in VIC over the coming weeks.
• The Reserve Bank of Australia’s minutes from their October meeting saw members acknowledge that less accommodative policy would likely see lower house prices and credit growth, as a response to help cool the housing market, but would also result in fewer jobs and lower wages growth further distancing the bank from their policy
• Australian lending data shows that new lending for housing is moderating as lending to investors continues to pick up whilst lending to first home buyers eases. Fixed rate lending continues to remain a relatively high share of the total. Lending for renovations has eased a little in recent months but still remains at an elevated level. Business lending has been firm during the lockdown months for NSW and VIC.
• US retail sales unexpectedly rose in September, despite economists’ worries about the delta-variant and the end of enhanced unemployment benefits.
• European central bank President Christina Lagarde warned that the globalised nature of the Euro area’s economy makes it very vulnerable to systemic shocks from supply chain disruptions. She reaffirmed the bank’s view that the current spike in inflation is unlikely to last.
• China’s economy weakened in the 3rd quarter, weighed down by a variety of issues including a property slump and energy shortages. It was the weakest quarterly growth since a contraction in the March quarter 2020. Economic growth came in at 4.9% from a year earlier, down from the 7.9% in the previous quarter. The central bank maintained they can contain risks posed to the economy and financial system.
• Ports are growing more congested as the covid-related supply shocks intensify which may erode corporate profits and drive-up consumer prices leading into the holiday.

POLITICS

• PM Scott Morrison has told Liberal colleagues he plans to move ahead with net zero emission plans despite concerns from the Nationals. It comes amid increasing pressure from the global community and the Australian business lobby to enunciate their plans more clearly. Nationals’ leader Barnaby Joyce warned of a “ripple effect through the Coalition” if he and his party were forced to submit to net zero. Analysis shows regional and country Australia will be the most adversely affected by the plan. The Nationals will be pushing for large concessions for their electorates.

• US President Biden held meetings with both wings of his party (ie. moderates vs progressives) in an effort to make progress on his economic agenda. Due to slim majorities in both houses of Congress, he will need almost all lawmakers on board with the plan. That will mean some measures will need to be dropped and the length of programs will need to be shortened to reduce the overall package. In addition, Democrats are now exploring alternatives to tax increase proposals in order to fund their spending packages as labour shortages and supply bottlenecks impact the economy.