Australian markets respond to Biden’s withdrawal from the US election

ABC NEWS (Australia)

ABC finance analyst Alan Kohler gives insight into the falling Aussie dollar, it’s relationship to Biden’s withdrawal from the US election campaign, and the Sahm recession rule.

Transcript

00:00I don't know whether the Aussie dollar fell today because Joe Biden bowed out yesterday,

00:06but it's been falling for a week, and although the decline did accelerate a bit in the past

00:1124 hours, that had nothing to do with the US dollar.

00:14The currency is now 66.6 US cents, down a full cent since last Monday.

00:20Asian markets were mixed today, Tokyo down more than 1%, Hong Kong up 1% after a Wall

00:26Street fall of 0.7% on Friday.

00:29The local share market dropped 0.5% today, but that seems to have been more the result

00:33of Friday's fall in New York than anticipation of another one tonight.

00:37But we'll see, of course.

00:38Banks, miners and tech stocks all fell, retailers went up.

00:43On commodity markets, oil and gold went up, iron ore and copper fell.

00:47Now the American election campaign is being fought with an economy close to recession,

00:52at least on one measure, called the Sarm rule, after the US economist who thought of it,

00:57Claudia Sarm.

00:58She said it's a recession if the three-month average of the unemployment rate rises by

01:03half a percent from the previous low, which a lot of people think is a better way to decide

01:08it than the usual two consecutive quarters of negative GDP, because jobs are more important

01:14than production.

01:15So this here is a graph of the Sarm rule, and it shows that on this basis, both the

01:20US and Australia are close to recession, even though GDP is still growing.

01:26And that's finance.

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