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August 18, 2020 by Venture

Market Update | August 2020

The Pulse

  • The impact of the COVID‐19 pandemic on the global economy has been profound, especially in emerging, low income economies with limited health care capacity.

    Click here to view the full update.
  • Trade tensions between the US and China added to market volatility, while the outcome of the November US presidential election remains uncertain.
  • A port explosion in Beirut killed at least 135 people and severe flooding in southern China added to the country’s woes, displacing millions from their homes.
  • The Reserve Bank of Australia (RBA) kept rates on hold at 0.25% at its August meeting and indicated it will resume purchases of 3‐year government bonds.
  • Harsher restrictions in Victoria following a spike in COVID‐19 cases could cost the Australian economy $9 billion, according to the federal government.

Australia

The Australian government warned that the economy likely shrunk at its fastest pace in recorded history in the June quarter, while the budget deficit will be the biggest since World War II as payments were extended to businesses and job seekers.

Global economies

Hopes of a V‐shaped recovery faded as COVID‐19 cases worldwide ticked over 15 million. Policy settings remain incredibly favourable as central banks and governments support economies via monetary easing and fiscal measures.

US

The impact of the coronavirus caused US GDP to shrink by an annualised 32.9% in the June quarter (‐9.5% quarter‐onquarter), slightly better than the expected 34.1% fall. Contractions were seen almost everywhere, particularly in personal consumption and exports, while federal government spending jumped.

Europe

The flash estimate for eurozone June quarter GDP came in as expected, falling 12.1%, making it the largest contraction on record as lockdowns continued to impact global demand. Inflation remained subdued in July, with the yearly rate at 0.4%, slightly above the 0.2% expected.

China

China’s June quarter GDP came in above expectations, with the yearly rate increasing to 3.2% (2.5% expected), following a ‐6.8% reading in the previous quarter and becoming the first country to report growth since the beginning of the pandemic.

Asia Region

Japan was initially successful in preventing the spread of COVID‐19. Cases have been rising recently, with over 40,000 confirmed at the start of August, but to date the economic effects have been less dramatic compared to other regions.

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Venture Financial Planning Pty Ltd ABN 62 095 194 559 is an Authorised Representative of Count Financial Ltd ABN 19 001 974 625
AFSL No. 227232 which is 85% owned by CountPlus Limited ABN 111 26 990 832 (CountPlus) of Level 8, 1 Chifley Square, Sydney 2000 NSW and 15% owned by Count Member Firm Pty Ltd ACN 633 983 490 of Level 8, 1 Chifley Square, Sydney 2000 NSW. CountPlus is listed on the Australian Stock Exchange. Count Member Firm Pty Ltd is owned by Count Member Firm DT Pty Ltd ACN 633 956 073 which holds the assets under a discretionary trust for certain beneficiaries including potentially some corporate authorised representatives of Count Financial Ltd. The information on this web page is not advice and is intended to provide general information only. It does not take into account your individual needs, objectives or personal circumstances.