Data is updated weekly as part of the Market Analysis service.
The ASX Bull-Bear Leading Index remains at 64, indicating a mild bull market. One of four Australian indicators and one of two Chinese indicators signal risk-off. The improvement in recent weeks is due to changes to the composite indicators for the US Leading Index, which has a 40% weighting in the ASX Index.
Forward Orders
NAB Forward Orders retreated below zero in March, indicating a slowing business outlook, but the 3-month moving average remains positive, signaling risk-on.
Housing Sector
Activity in the Australian housing sector is improving, with the 3-month moving average of private housing approvals rising to 16.6K in March. The 3-month MA above the 20-year MA signals risk-on.
Financial Sector
Financial sector performance reflects confidence in the broader economy, particularly in the housing sector. The ASX 200 Financials Index (XFJ) had a weak close to the week, but remains above its 50-week weighted moving average and primary support at 9000, signaling risk-on.
ASX 200 Real Returns
Performance of the ASX 200 Index relative to Gold (in Australian Dollars) reflects the real return on the index. The ASX 200 is in a long-term downtrend relative to Gold, signaling risk-off.
China
China is Australia’s largest export market, and the performance of the Chinese economy directly impacts the ASX. The OECD Composite Leading Indicator lifted to 98.8 in April, from 98.49 in March. A fall of more than 3 points from the preceding peak, or values below 99.0, signal risk-off.
Chinese Manufacturing
The Chinese manufacturing sector remains in expansion, with the NBS Manufacturing PMI above 50. Values below 49.0 signal risk-off.
Conclusion
The Bull-Bear indicator suggests that the Australian economy has slowed, but the probability of a recession is not yet high.
Acknowledgments
- NAB: Monthly Business Survey
- ABS: Private Dwelling Approvals
- Trading Economics: China Business Indicators
- OECD: Composite Leading Indicators
- ABS: National Accounts