St George Economics economy and finance update

Share Markets:

Sentiment was broadly positive, despite some disappointing data from the US.

Equity markets continued to recover from large losses last week with the prospect of easy monetary policy continuing to support markets.

The re-election of the Italian president may have also helped to lift sentiment. 

In the US,the Dow rose 0.1%, the S&P500 lifted 0.5%, while the Nasdaq rose 0.9%.


US treasuries rose (yields fell) despite the more positive mood in equity markets.

Weaker-than-expected economic data helped prop up demand for US bonds, while ongoing buying from the US Federal Reserve was also supportive under its quantitative easing program.

Foreign Exchange:

The US dollar weakened slightly against the Japanese yen, after coming close to touching ¥100 on comments from the G20 supporting the BoJ's easy monetary policy stance.

The Australian dollar was little changed, briefly rising to just above 1.03 before retreating back to 1.026.

Today, the Chinese HSBC flash PMI index will be key in driving Aussie short-term movements.


Oil and gold prices continued to recover from their sharp drops last week.

However, the broad CRB index fell, dragged down by copper on concerns about global demand.

Australia:  No domestic data to report.


The Italian president, 87 year-old Giorgio Napolitano, has been re-elected as Italian president for another 7-year term.

Reports have hinted that the re-election might indicate that parties are closer to forming a coalition government, and seen as lowering the possibility of heading to another election.

Euro zone consumer confidence improved from -23.5 to -22.3 in the advanced report for April, its highest since July last year.

The index has risen every month since bottoming at -26.7 in November.

Despite the improvement, confidence remains much lower than the 2010-11 highs of around -10.

United States:

US existing home sales fell 0.6% in March, from a revised gain of 0.2% in February (previously 0.8%).

The March annualised sales pace of 4.92mn is 0.8% below the three year high point for sales of 4.96mn seen in November last year, but sales were 27.0% higher in the year to March.

An encouraging development however, was a decline in the proportion of distressed homes available for sale, while median house prices continued to rise.

US Chicago Fed national activity indicator slowed from 0.76 to -0.23 in March, adding to range of recent data that there may have been some loss in momentum in the US economy towards the end of Q1.


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