Insights

• The trade talks between the US and China appear to have started
  improving, although the uncertainty continues to impact markets with
  volatility remaining high. Despite the geopolitical uncertainty most
  major markets are up from a month ago on improved expectations.
• Australian equities have been strong with the IT, consumer
  discretionary and industrial sectors leading the way. Energy stocks were
  supported in September following a drone attack on an oil processing
  facility in Saudi Arabia (the world’s largest producer) which led to a
  sharp increase in oil prices.
• At their October meeting the RBA cut the cash rate to 0.75% as
  concerns grew over employment growth and inflation. Another rate cut in
  the short-term is expected (in effort to further boost the economy and
  inflation) however zero and negative rates are unlikely. If needed, it
  is more probable that the RBA turns to other methods such as
  quantitative easing (printing more money/injecting liquidity into the
  economy).
• The deadline for the UK to leave the European Union (EU) has been
  extended three months to 31 January 2020. The EU is likely to offer a
  further extension if a deal cannot be agreed upon by the deadline to
  avoid a politically and economically damaging no-deal Brexit. This is
  the third time that the Brexit deadline has been changed since voters
  decided to leave the EU.
• UK Prime Minister Boris Johnson continues to push for an election to
  break the political impasse over Brexit but has lost a recent vote in
  the House of Commons to hold a general election on December 12.
• The People’s Bank of China cut their reserve requirements for all
  banks to help shore up the Chinese economy as industrial production
  slumped it weakest rate in 17 years. The Chinese economy is experiencing
  growing pressure from the unresolved trade war with the US as well as
  slowly declining domestic demand.
• Demand for bonds has decreased with the 10-year government bond yield increasing to 1.14% as investors favoured equities.

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