In its Australian Economic Update for October, Morningstar said that in addition to the “knock-on impact” of volatility in overseas markets, a variety of factors have weighed on the major sectors, which led to the poor performance in the September quarter.
“The financials (-3.0 per cent) were overshadowed by potential increased regulation of the banks and the consumer stocks were held back by cautious household behaviour,” a report from Morningstar said.
“Most importantly, the miners were badly hit by falling commodity prices and by signs of weaker growth in China and dropped by 5.3 per cent,” the report said.
“The decline for the quarter somewhat understates the true state of affairs for the resources stocks [since] they had rallied in July and the first half of August, rather against the longer-term trend.”
Morningstar also said Australian shares continue to be “overshadowed” by a period of slower than usual growth, with some sectors doing reasonably well but collectively not doing well enough to counteract the “dead weight” of the underperforming ones.'
“Cautious consumers have also been part of the sub-trend picture,” Morningstar said.
“The latest retail sales numbers, for August, show spending increased by only 0.1 per cent – less than forecasters had expected,” the report said.
“Although a single month's numbers are only one straw in the wind, they are consistent with what the consumer confidence surveys have been saying about Australian households' state of mind.”
