War in Ukraine keeps investors edgy

Share Markets: 

Despite good news on US jobs growth US equity markets weakened. Also, activity in the Ukraine is keeping investors wary.

The Dow fell 0.3% while in Europe, the FTSE100 was up 0.2% and the Dax fell 0.5%.


US 2 year treasury bond yields initially rose following the US employment report (see below), from 0.41% to 0.47%, but then retreated to 0.42%.

US 10 year yields initially lifted from 2.62% to 2.70% but started reversing within minutes and eventually fell to 2.58%.

In Australia, both 3 and 10 year government bond yields ended the day a touch lower.

Foreign Exchange: 

The US dollar index initially jumped by 0.4% in response to the stronger US payrolls result but reversed two hours later to close slightly lower.

EUR initially fell from 1.3870 to 1.3812 but later reversed to 1.3881. USD/JPY jumped from 102.50 to 103.02 and then fell to 102.13.

AUD initially fell from 0.9270 to 0.9203 but started reversing within minutes towards 0.9279 and ending around that level.


Commodities picked up on Friday broadly in response to the stronger than expected US payrolls data.

West Texas crude remains below US$100 per barrel and gold is still a fraction below US$1300 per ounce.


Producer prices at the final demand stage of production rose by 0.9% in the March quarter, much stronger than consensus expectations that centred on a rise of 0.6%. 

On a year ago, producer prices are running at a pace of 2.5%, which is the fastest pace since the final quarter of 2011.  

Much of the rise in the quarter was due to strong growth in imported producer prices.  Imported producer prices at the final demand stage lifted by 2.7% compared with only 0.7% for domestic. 

Further, imported producer prices at the final demand stage are growing at an annual pace of 8.4% compared with 1.9% for domestic. 

This producer-prices data ties in with the view that inflationary pressures are no longer benign and risks are building to the upside.

Housing Industry Association data showed that new home sales rose by 0.2% in March, after growth of 4.6% in February.


The reading for non-manufacturing PMI in April saw an upturn from 54.5 to 54.8. Growth remains firm in China but not at the same breakneck pace seen in previous years.


The Eurozone jobless rate was steady at 11.8% in March, revised down from 11.9% previously in February. 

The Eurozone factory PMI was revised up a tick to 53.4 in April final reading. These are both very modestly-positive outcomes.


The expected front loading of consumption ahead of the April 1 tax hike had left almost no imprint on Jan-Feb data, and then came March. 

Real household spending increased 7.2% in the month.  The best performing categories were unsurprisingly centred on durables, with household goods, apparel, transport and communication and entertainment all beneficiaries of the pull-forward.

In other data, the jobless rate stayed steady at 3.6% in March. 

United Kingdom:

UK PMI construction eased in April, but is still very strong at 60.8. The UK economy appears to be gaining upward momentum.

United States: 

US non-farm payroll employment grew by a solid 288k in April, and upward revision to the previous two months have resulted in job growth exceeding 200k in three out the four months so far this year. 

While the US economy is not booming, it is showing good signs of recovery - which will have implications for interest rates later this year.

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