Market Update – October 2020

  • The upcoming US presidential election is contributing to market volatility and raising fears of a disputed election result, which could lead to market instability.

  • Attention shifted in September from monetary policy to fiscal policy as markets looked for signs that fiscal spending will continue to prop up economies around the world.

  • The Australian federal budget delivered in October was heavily focused on supporting employment and incomes, producing a $214 billion deficit for 2020-21.

  • Fears of a new wave of infections have gripped Europe, with France’s daily cases reaching an all-time high of nearly 19,000 in early October.

  • China has been successful in containing the COVID-19 virus and is hoping for a consumer-led recovery to take hold as restrictions ease.

Global economies

Data from the World Health Organisation showed confirmed cases worldwide were above 33 million at the end of September and rising. The global recovery is taking hold as economies gradually emerge from lockdown, however significant uncertainty remains about the possible path the pandemic could take and the timeline for vaccines to be made available to the public.

US

Recent data suggests the US recovery lost some steam in September with key releases falling short of expectations. Nonfarm payrolls disappointed, with 661,000 jobs added, well short of the consensus 859,000.

Europe

Most EU member economies remain under pressure from COVID-19 containment measures as governments fear a new wave of infections could forestall the recovery.

China

China has largely contained the COVID-19 virus with just over 91,000 confirmed cases and an official death toll of 4,700 at the time of writing. China’s recovery is well under way, although consumers remain cautious and there is still potential for further outbreaks.

Asia Region

Japan’s incoming prime minister Suga Yoshihide will lead the economic recovery following the resignation of Shinzo Abe.

Australia

The federal budget has allayed fears that fiscal policy will be doing too little lifting in the face of the pandemic, with a singular focus on supporting incomes and employment. On the spending side, the government has put in place significant stimulatory measures, including $120 billion over 2019-20 and 2020-21, primarily for the JobKeeper payment.

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The information in this Market Update is current as at 9/10/2020 and is prepared by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445 on behalf of National Australia Bank and its subsidiaries. Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Before making any decisions based on the content of this document, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain and read the corresponding Product Disclosure Statement (PDS) and consider the contents of the PDS before making a decision about whether to acquire the product.