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SMSF weekly market update: spotlight on Australian earnings


Stronger than feared profit results and reasonable economic data are among the factors steering Australia away from a recession.

Economic update: Global and Australia

The threat of a global recession rattled sharemarkets at the start of the year, and although global data is mixed, there are some signs of improvement. The manufacturing weakness in the US may be coming to an end and the US Federal Reserve (Fed) is slowing down its proposed interest rate hikes. Other central banks are gearing up to provide stimulus and this is contributing to a reasonably positive policy environment. Economic data within Australia has been reasonable and retail sales and housing indicators are quite solid. Confidence levels are hovering around long-term average levels. The Reserve Bank of Australia (RBA) might need to provide more support in terms of interest rate cuts, but there’s certainly no sign of Australia entering into a recession.

Australian reporting season: How have company profit results turned out

The latest round of profit results reported by Australian companies (December half of 2015) have proven to be better than feared. Although resourcing companies saw big falls in profits and cuts to dividends, this was not surprising. On the whole, the results were reasonably good and showed decent profit growth. Australian companies which are aligned to growing sectors in the economy like housing, retail and health performed particularly well.

About the author
Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital's diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.
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