MLC Asset Management Senior Economist Bob Cunneen discusses the weak performance of global shares in September, against a backdrop of uncertainty about future fiscal stimulus.Global share markets put in a weak performance in September, but this comes after the strong gains in August. For September, Wall Street led the decline, with the broader index down about 4 per cent. Now, there were a couple of key concerns in September that dominated markets. Firstly, the virus remains a threat. In terms of global new infections, they're now running at close to 300,000 per day. There has been an acceleration in cases in particular in India, and another wave in Europe, which is a key concern.
We've also seen doubts about future fiscal stimulus. So, governments over the last six months have pledged enormous amounts in terms of income support. However, what we've seen in terms of the American Congress is there's still debate about extending those fiscal stimulus programs.
The global economy is making a very gradual and grinding recovery at this stage, after the deep recession conditions that prevailed in the June quarter. So, what we can see in terms of most of the leading indicators -- so business surveys, car sales and labour market job vacancies -- is there is some improvement, but this improvement is very, very slow. And until the virus is contained, until we have a vaccine that is effective, safe and readily available, the global economy will continue to struggle and will not make a full recovery.
The Australian share market also had a disappointing performance in September, with a fall close to 4 per cent. Now, this was led by a couple of key sectors. In particular, the energy sector fell about 11 per cent. And this was in line with the very sharp falls in the oil price, as well as concerns about further asset writedowns for major energy companies.
We also saw our technology sector underperform, in line with what happened on the NASDAQ on Wall Street. So, our technology sector was down about 7 per cent. As well, our financials were down about 6 per cent, and that is in line with concerns about future income support programs from the government, as in the JobKeeper program. Also concerns about the loan deferral program being wound back by the banks, and with that, there is concern about rising doubtful debts for financial institutions.
Regrettably, the Australian economy is still struggling, with a mixed performance in terms of the economic indicators. Firstly, on the negative side, we had confirmation of the deep recession, with the June quarter national accounts showing that Australia's GDP fell by 7 per cent in the June quarter. Now, this is the largest contraction in GDP since records began in 1959. We've also seen signs in terms of retail sales in August, that fell about 4 per cent, which indicates that the Melbourne virus outbreak that started in July has, essentially, delayed the recovery for the Australian economy.
But we do have some positive signals. In particular, consumer sentiment and the business surveys have bounced in September. We've also seen some encouraging signs in terms of the labour market, that it is improving, although it is at a very slow pace. So, for August itself, we had a gain of 111,000 in terms of new jobs, and the unemployment rate was lower, from 7.5 per cent in July to 6.8 per cent in August. However, we still have some considerable distance to make up in terms of the recovery.
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