In a note to investors, BetaShares chief economist David Bassanese said central banks were increasingly holding off on easing, supporting bond yields and driving investors away from yield stocks.
"US payrolls are expected to be rate-hike supportive, with an employment gain of 175,000," he said.
"No moves by either Bank of England and Bank of Japan are expected, which adds to the theme that central banks are holding back on further stimulus."
In Australia, further rate cuts from the RBA were unlikely until “it feels the need to lower its inflation forecasts further”, which may not be until the February or May meetings in 2017, he said.
Building approvals are likely to ease in September, and retail sales “should post a more muted 0.2 per cent gain” after the 0.4 per cent recorded in August, Mr Bassanese said, and the trade balance is likely to narrow courtesy of gains in coal and iron ore prices.
Despite this data, Australian stocks have underperformed, Mr Bassanese said, as a consequence of investors choosing to “ditch their once-loved yield stocks in the facing of rising bond yields”.
“Equity markets are understandably nervous at present, with global central banks less supportive than they used to be, rising bond yields and Trump not yet out for the count,” he said
“US earnings season is also proving mixed, and not sufficiently positive to drag Wall Street higher. That said, markets have yet to endure a major sell-off, with the pull back in recent weeks fairly gradual.”
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