St George Economics economy and finance update


Sentiment lifted last night on upbeat US economic data.

Concerns over Europe, however, dented sentiment, with news the European Parliament is pushing for deposits above €100,000 to be explicitly subject to haircuts in future weighing on sentiment.

Share Markets: 

The US stockmarket gained ground boosted by strong data on home prices.

The Dow and the S&P 500 both rose 0.8% and the Nasdaq was up 0.5% for the session.


US government bonds edged higher at the long end (yields fell slightly) amid concerns the plan in Cyprus for losses for banks' bondholders and large depositors could pave the way for any future Euro zone bailouts.

However, stronger US economic data limited the gains in US government bonds.

Foreign Exchange:

The Aussie dollar gained ground against the US dollar after upbeat US economic data slightly lifted risk appetites.

The Euro weakened on concerns Cyprus' bank aid plan may be used in future Euro zone bailout plans.

The Yen lost ground versus the Aussie dollar on expectations of aggressive monetary easing ahead of the Bank of Japan meeting next week.


Commodities strengthened, led by copper and oil, with upbeat US economic data boosting hopes for global economic growth.


There was no significant data to report locally.


Ratings agency Fitch put Cyprus' B rating on negative watch but Standard & Poor's already has a CCC rating on Cyprus, so the move was ignored.

New Zealand:

New Zealand posted a larger-than-expected trade surplus last month on shipments of whole milk powder, logs and sheep meat to China.

The surplus was NZ$414 million in February from a revised deficit of NZ$287 million in the previous month.

The annual trade deficit narrowed to NZ$1.08 billion from NZ$1.3 billion.

United Kingdom: 

The CBI retail survey showed reported sales slowing from a reading of 8 to 0 in March, the weakest since August last year (when it was weighed down by the Olympics).

United States:

Durable goods orders jumped 5.7% in February, fully reversing their 3.8% decline in January.

Core durable goods orders, however, fell 3.5% in the year to February, indicating a subdued picture for durable goods.

US new home sales fell 4.6% in February, but have trended higher since August last year.

The annualised sales pace shows a gain of 12.3% in the year to February, following a 34% gain in the year to February 2012.

This still leaves new home sales sharply lower than their peak in 2005.

House prices were stronger than expected, rising  1.02% in January and 8.1% in the year to January, according to the S&P Case-Shiller measure.

This was the fastest annual pace since 2006, with the monthly data showing gains for a year now.

Consumer confidence fell to 59.7 in March, from 68.0 in February, according to the Conference Board measure.

This reversed most of the February increase, with the decline led by expectations, although the present index was also weaker.

The Richmond Fed factory index slowed from a reading of 6 to 3 in March, with shipments growing more slowly, orders falling and jobs growth slightly higher.


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