Key Takeaways
- Australia's economy presents a mixed picture: September saw weaker-than-expected household spending at 0.2% month-on-month (vs. est 0.4%) and 5.1% year-on-year (vs. est 5.5%), alongside a continued decline in job advertisements by 2.2% in October. However, building approvals surged by an impressive 12.0% month-on-month in September, significantly exceeding the 5.0% estimate, driven by a 26.0% rise in private dwellings excluding houses.
- China has scrapped a long-standing gold tax break, effective November 1, sending shockwaves through the global bullion market and potentially increasing costs for Chinese consumers and impacting global gold prices. This move is seen as an effort by Beijing to boost government revenue amid slowing economic growth.
- US futures are climbing, extending a seven-month global rally fueled by tech optimism and signs of easing trade tensions between the US and China, including China rolling back rare-earth curbs. Meanwhile, Chinese refiners are reportedly backing off Russian oil imports due to new US/EU sanctions, impacting nearly half of China's Russian crude imports.
- Australian inflation remains sticky, with the Melbourne Institute reporting October year-over-year inflation at +3.1%, a slight increase from +3.0% the previous month, while monthly inflation eased to 0.3% from 0.4%. This suggests price pressures persist, keeping inflation just above the Reserve Bank of Australia's target band.
Asia-Pacific markets opened to a mixed sentiment on Monday, November 3, as investors digested a series of economic data releases and significant policy shifts. Japanese markets remained closed for a holiday.
In Australia, economic indicators painted a nuanced picture. Household spending in September rose by a modest 0.2% month-on-month, falling short of the 0.4% estimate, and annual growth came in at 5.1%, below the 5.5% forecast. This suggests a slowdown in consumer activity. Adding to concerns about the labor market, ANZ-Indeed Job Advertisements continued their decline in October, falling by 2.2% after a 3.3% drop in September, signaling easing labor market conditions.
However, there was a significant positive development in the construction sector, with Australian building approvals soaring by 12.0% month-on-month in September, far surpassing the 5.0% estimate and reversing a previous decline. This surge was primarily driven by a 26.0% rise in private dwellings excluding houses, indicating a strong rebound in apartment and multi-unit developments. Meanwhile, the Melbourne Institute's inflation gauge showed October year-over-year inflation at 3.1%, slightly up from 3.0%, suggesting persistent price pressures that may influence the Reserve Bank of Australia's (RBA) future policy decisions.
Globally, the bullion market is reacting to China's decision to eliminate a long-standing tax break on gold sales, effective November 1. This policy change is expected to increase costs for Chinese consumers and could have a dampening effect on demand in one of the world's largest gold markets, as Beijing seeks to bolster fiscal revenues. Gold prices have already seen some slippage in response to this development.
In broader market news, US futures are showing gains, extending a seven-month global rally driven by optimism around the tech sector. This positive sentiment is also supported by signs of easing trade tensions between the US and China, with China reportedly rolling back curbs on rare-earth exports. Conversely, Chinese refiners are reportedly reducing their imports of Russian oil due to new US and EU sanctions targeting Russian oil majors like Rosneft and Lukoil, a move that could significantly impact Moscow's cash flow.
Japan is also considering policy changes, with reports from Nikkei indicating discussions about ending tax relief for individuals bringing items from abroad. This potential move could affect inbound tourism and consumption.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.