The December quarter GDP figures contained news that the Australian Household saving ratio fell below 10% for the first time since 2010. A falling savings rate can provide a turbo boost to spending in the early stages of a recovery, helping spending growth to outpace income growth. Yesterday’s 1.2% increase in January retail sales followed a string of solid gains in recent months and suggests this process might be underway in Australia.
All this put retail stocks in focus yesterday. Technical traders will be keeping an eye on JB Hi Fi which had a good rally but encountered selling when it reached its 200 day moving average. This price zone looks like a litmus test for sentiment with the resistance of the previous peak also just above the 200 day average.