St George Economics economy and finance update

Share Markets: Share markets were lacklustre, and were weighed down by disappointing US data.

Earnings results were mixed, while concerns about terrorism may be continuing to dampen sentiment.

The Dow weakened 0.6%, while the S&P500 dropped 0.7% and the Nasdaq fell 1.2%.

In Europe, share markets performed relatively better, helped by news Germany had voted to grant Cyprus's €10bn bailout and a successful Spanish bond auction.

The FTSE 100 was flat, and the Euro Stoxx rose 0.1%. 


US treasuries were slightly firmer (yields lower) as weaker sentiment continued to support demand for government assets.

In an auction last night, Spain successfully sold 10-year bonds worth €4.7bn at the lowest yields since 2010.

Foreign Exchange:

Currency markets were little changed, but were volatile.

The US dollar initially rose, but retreated after the Philadelphia factory report disappointed.

The Australian dollar was little changed at around 1.030, and continues to be weighed down by concerns on China and the outlook for global growth which arose earlier this week.


Commodity prices rose despite a lack of good news, suggesting that recent falls may have been overdone.

Oil prices lifted, with Brent crude rising to back above US$100 a barrel.

Gold is slowly recovering some of its losses after the sharp sell-off on Monday.


The NAB quarterly business survey revealed business confidence improved from -5 to 2 in the March quarter, reflecting an easing in risks to the global growth outlook and rallies in equity markets in the quarter.

The improvement is an encouraging sign.

However, some of the detail in the survey was worrisome, notably the intentions survey for investment.

Capex plans were weak, particularly for non-mining investment.

Although this seems conflicting with ABS data and anecdotal evidence from the RBA, it highlights the uncertainty for the outlook and keeps the possibility of another rate cut from the RBA alive.


The merchandise trade deficit narrowed to ¥362.4bn in March from ¥779.5bn previously, suggesting that the weaker yen is starting to support exports.

There is prospect for further improvement given the Bank of Japan's (BoJ) new aggressive easing stance, which will likely continue to keep downward pressure on the yen.

New Zealand:

ANZ NZ job ads rose 0.7% in March after a revised 1.8% increase in the previous month.

The ANZ consumer confidence index rose from 114.8 to 119.2 in April, the highest in more than three years.

United Kingdom: 

Retail sales fell 0.7% in March, to be down 0.5% in the year. The weakness may have been influenced by very cold weather in the month.

United States: 

The Philadelphia Fed factory index slipped from 2.0 to 1.3 in April, a subdued result but still holding above 0 after weak readings earlier in the year.

The detail for April showed orders and jobs both slipping below 0 (to -1 and -7 respectively) but shipments accelerated further to 9.

US initial jobless claims rose 4k to 352k in the week ending 13 April, confirming a downward trend since the start of the year, after taking into account seasonal distortions.

The leading index was down 0.1% in March, its first fall since August last year and is suggesting that economic activity is cooling.


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