The past week has been quite a significant one as it became clear that the US and Australia were diverging in a significant way.
Here in Australia the ongoing upward trend in inflation made it clear that there is now little hope of an interest rate cut.
Indeed, much of the speculation is that we may have seen the bottom of this interest rate cycle and the next move by the Reserve Bank could well be a rise in official interest rates sometime next year.
It is a very different story in the US with analysts putting a very high probability on the US Federal Reserve cutting official interest rates at its December meeting, adding fuel to the US share market in the process.
November worst month since March
In the end the Australian market ended up flat on Friday, down 3.2 points to 8614.1 points, although it overcame a four-week losing streak to gain 2.3% for the week.
However, it was not enough to rescue the month of November which saw the index fall 3% for the month, making it the worst month for equities since March.
While the US market remains the single biggest influence over the direction of the Australian share market, the fact that the two economies are now likely to be heading in different directions in regard to future official interest rates will be a major differential factor.
Tech helps to push the index higher
On Friday, the technology sector helped to push the index upwards with some big names enjoying a solid day of trading.
WiseTech Global (ASX: WTC) rose an impressive 4.7% to $73.02, shares in Life360 (ASX: 360) rose 2.6% to $40.43 and TechnologyOne (ASX: TNE) rose 0.6% to $30.85.
It was also a good day for consumer staples with Woolworths (ASX: WOW) up 3.2% to $29.32 after a JPMorgan report upgraded the supermarket stock from “neutral” to “overweight”.
Shares in hotels, liquor and pokies group Endeavour (ASX: EDV) climbed 1.9% to $3.70.
It was a less pretty picture for the big banks with shares in Commonwealth (ASX: CBA), National Australia Bank (ASX: NAB) and ANZ (ASX: ANZ) all falling around 1%.
Westpac (ASX: WBC) fell 0.8% to $37.59 after its New Zealand arm was fined $NZ3.64 million ($3.19 million) for breaching lender-responsibility rules, after it failed to provide customers with legally required loan information.
Insurer Suncorp (ASX: SUN) also pushed down the financials, with its shares falling 3.6% to $17.56 after UBS cut its share price target as it warned the insurer faces a major hit to earnings following a spike in natural hazard claims.
Monash IVF (ASX: MVF) were flat at 85¢ after the Victorian government imposed more conditions on the registration of its Victorian clinics following an embryo mix-up disclosed in June.
The Week Ahead
We are set for a busy week coming up with a raft of economic indicators set to be released as December begins.
The biggest is the national accounts out on Wednesday which are expected to show that economic growth is on the rise, firming from an annual 1.8% to 2.2%.
Other releases include house prices, building approvals, household spending and job advertisements while overseas there is a speech from US Fed Reserve chair Jerome Powell will be widely monitored.
A series of company annual meetings could also nudge some share prices around.
