Weekly commentary


The US economy grew at a 2.4% annual growth rate during the third quarter of 2000, its slowest since mid 1996. The US economy is now operating at well below its non-inflationary productive growth capacity of 4.0-4.5% per annum. The slowdown in growth if sustained is expected to lead to a decline in US official interest rates during the first half of 2001. Australia recorded a trade surplus of $324m in October as the benefits of the weak A$ continue to drive export growth. Exports are expected to be the key driver of economic growth in FY01.


The NASDAQ reaches its lowest level for the year of 2,523 points a decline of 51% from its peak, while funds continue to flow towards bonds and blue chip defensive stocks. We continue to favour defensive stocks such as Banks, Infrastructure & Utilities & Retailers. The resources sector is expected to be underpinned by the weak A$ and renewed corporate activity assuming the world economy achieves a “soft economic landing”.

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