Market Wrap 23-12-2016

As we head off into the Christmas break it is time to look back over the past 12 month.  The market is up 6.8% on this time last year, since the low of the GFC in 2009 the market has recovered 75% or 8.5% per annum.

The market looks ready to push its way back to 6000 points in the coming year. Given improvements I the US economy with interest rate rising over there, improvements in the price of Iron Ore and Coal it is expected that Australia’s economy will begin to improve in the 2018 financial year. In 2017 we expect to see more budget saving measures as well as increase in government spending on infrastructure.

It will take time for the economic effects of recent improvements to filter down to become economic benefits for the average person, such as improvements in employment levels. My predication for 2017:

1.       I expect retails sales will be slow this Christmas and following through next year.   Unemployment is still high even with participation rates decreasing. Levels of under employment are also increasing. Retail sales will not improve until employment does.

2.       Interest will move up next year, they will still be historically low but there is pressure on rates due to the increase in house prices.  

3.       Governments will start to announce infrastructure spending, I expect up here in the north this will focus on water. Hopefully a Dam or two.  We have already seen the rushed announcement for Adarni Mining.

Investors need to keep in mind that the market is forward looking as such I expect to see the market to continue to raise and head towards 6000 point in the coming 12 months. It will not be straight up it never is. Companies have made the cuts to expenses and consolidated where they can, they are ready to benefit once the government kicks in.

Merry Christmas.