Capital city dwelling prices across Australia rose by 1.4% for the second consecutive month in March, according to data from CoreLogic.
The annual growth rate of dwelling prices also rose, to 12.9%, the fastest pace since May 2010. Strong growth in dwelling prices in Sydney and Melbourne, as well as Canberra and Hobart, boosted the pace of national dwelling price growth.
Annual growth in Sydney dwelling prices jumped to 18.9% in March, which was the highest pace of growth since November 2002. It was up from growth of 18.4% in the year to February. Annual growth picked up further in Melbourne also.
Dwelling price growth in Sydney and Melbourne remains on the radar for the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA).
APRA further tightened supervisory measures for lending last week. The measures are designed to ensure financial stability and are likely to result in a slowing in investor activity and a moderation in house price growth, over time.
Retail spending fell 0.1% in February, which was the second monthly contraction over the past three months.
The annual pace of growth stepped down from 3.1% to 2.7%, the weakest annual pace in over 3½ years, and further below the long-run average.
The data shows that Australians are once again tightening their belts.The increased wealth effect of rising house prices appear to no longer be having the same positive impact on household spending.
Slow wages growth and consumer caution are limiting the ability for consumers to increase spending. If consumers continue to stay within their shells, doubts will grow that the domestic economy can pick up to an above trend pace in coming years.
In other data, building approvals jumped 8.3% in February, easily surpassing expectations for a small decline.
For the year to February, building approvals are down 4.9%, a pickup from a decline of 11.6% in the year to January.
The strength in February's building approvals was in approvals for both 'other' dwellings (multi-density dwellings), which increased by 11.0% and houses (5.7%).
Building approvals remain at a high level and are well above the long-run average.
It suggests building activity is set to remain elevated over the next 12 to 18 months, although residential construction is likely to slow, possibly starting by the end of 2017.
While February's increase in building approvals was strong, that momentum is unlikely to be sustained.
In the year to February, total building approvals declined in most States; NSW was the exception.
US share markets fell overnight after auto manufacturers reported worse-than-expected US auto sales for March.
The S&P 500 index fell 4 points (or 0.2%) and the Dow Jones closed 13 points lower (or down 0.1%).
US 10-year treasury yields fell from 2.39% to 2.32% - a one-month low and close to the bottom of a four-month old trading range.
US 2-year yields fell 3 basis points to 1.23%. Fed fund futures yields continue to price around a 65% chance of the next hike occurring by the end of June (although pricing further out fell a few basis points overnight).
US Federal Reserve member Harker repeated his view that a total of three hikes in 2017 would be appropriate, assuming forecasts are met, but emphasised gradualism.
The US dollar index is up modestly in overnight trade to be at a two-week high. EUR/USD probed slightly lower, to 1.0643. USD/JPY fell from 111.60 to 110.86; the safe-haven yen outperformed overnight in a session that was marked by higher risk aversion among investors.
AUD/UISD probed lower to 0.7591 in early London trade. It then consolidated for the remainder of the night.
NZD/USD ranged between 0.6985 and 0.7010. AUD/NZD ranged sideways between 1.0850 and 1.0885.
The price of gold lifted overnight while base metal prices dropped in overnight trade.
The unemployment rate fell from 9.6% in January to 9.5% in February. Producer prices for the region were also weak, coming in flat for February. It follows a weak inflation report the day before.
Headline readings on business sentiment from yesterday's Tankan survey for the first quarter showed broad improvement across large and small companies in manufacturing and non-manufacturing.
A weaker yen was a key factor buoying the mood among manufacturers, which are more dependent on exports.
The Tankan index for large manufacturers rose from 10 in Q4 of last year to 12 in Q1 this year. The index also improved for small manufacturers and non-manufacturing.
The Markit PMI for manufacturing fell slightly in March to 54.2, from 54.5 in February.
The ISM manufacturing index edged down from 57.7 in February to 57.2 in March, in line with consensus estimates.
Some pullback was anticipated after the strong rise in the index after the election. Levels in the ISM manufacturing index remain consistent with solid growth in the factory sector. The sub indices showed that prices are at their highest since May 2011 and employment the highest since June 2011.
Philadelphia Fed President Patrick Harker repeated overnight that the Federal Reserve should plan to raise interest rates twice more this year so to avoid getting behind the curve. Harker is one of 10 voters on monetary policy this year, under a rotation.
Auto industry publication WardsAuto put the seasonally-adjusted annualized rate (SAAR) for light vehicle sales in March at 16.53 million units.
Industry consultant Autodata put industry SAAR at 16.62 million units for March.
That was below the 17.3 million that consensus expected and it is the first time since August that the SAAR - a crucial industry metric - had fallen below 17 million.
Industry experts are increasingly concerned about rising inventory levels and consumer discounts as automakers push harder to sell their products.
A pricing war in the market could undermine automakers' profits.
Moreover, last week, credit ratings agency Moody's warned that flattening US auto sales pose a significant credit risk for auto lenders.
Update your news preferences and get the latest news delivered to your inbox.