The profit reporting season that just ended was reasonably good with profit growth expectations affirmed. While June quarter GDP growth slowed, it reflects pay back for unbelievably strong March quarter growth. Forward looking indicators point to a gradual pick-up in demand driven by a rebalancing in the economy. The combination of improving growth and low interest rates suggest the trend in Australian shares remains up.
The slowdown in June quarter GDP growth to just 0.5% quarter on quarter, or just 2% on a US style annualised basis, against the backdrop of weak commodity prices, the end of the mining investment boom and rising unemployment may add to consternation regarding the Australian economic outlook. And yet the local share market has been performing well. Is the outlook as bad as some fear or have shares got it right? Yet again the share market seems to have taken comfort from recent earnings results so I’ll start there.
Please click here to read full article: profits-and-the-australian-economy-not-bad – Edition 29 – 3 September 2014