The S&P/ASX 200 (ASX: XJO) had a negative week, delivering a 2.2% loss while US stock markets were also in the red over the five days.
Here are my three key takeaways from the week.
It’s the economy stupid
The saying used in Bill Clinton’s campaign provides a simple explanation of the market events of the week, with the reality of the Delta variant, or at least the government reaction to them, ultimately determining the course of the economy.
Lockdowns have expanded across Australia, while China and many regions in the US and Europe are seeing massive case numbers and deaths.
The stimulus of last year has all but disappeared and without any new policies, we may be looking at a double-dip recession if not a Japanese deflationary period ahead.
Anaemic wage growth
This is best evidenced by the wage growth results released this week, in which Australian wage growth slumped to one of the slowest rates in history.
Wages lifted just 0.4%, and are now at 1.7% over the last 12 months – both were well below economist forecasts as usual.
In addition to this, Australians gave up looking for work with the drop in unemployment caused by a 1% fall in the participation rate of those seeking employment.
Anything is possible
Anything is possible in markets after we finally saw BHP Group Ltd (ASX: BHP) give up its London listing and seek to hive off its petroleum assets in a deal with Woodside Petroleum Limited (ASX: WPL).
Whilst markets haven’t cheered the decision thus far, it appears a strong move simplifying the business whilst many other groups like Santos Ltd (ASX: STO) are out seeking to deploy capital.
