Australian Economy – Though the employment figures surprised on the upside, data released throughout the month pointed to continuing weakness in the overall economy. Housing and construction activity continues to disappoint with business and consumer confidence heading back to recent lows. With inflation all but disappearing for the March quarter, arguments against further rate cuts are all but gone. And on May 1, the RBA heeded the call with a surprisingly big 0.5% blow to the official cash rate .
Global Economy – European woes plagued markets with much of the union now officially in recession and Spain and it's banks looking rather fragile. The US recovery looked a bit softer in April as well with weak employment figures raising some concern. In China, though a soft landing is well under way, the Government continues to provide stimulus through both easing of monetary conditions and deregulation.
Investment Markets – Weakening data saw volatility roar back to life throughout the past month. April was pretty much the opposite of March with China regaining it's large losses and Japan losing it's large gains. European stocks took a big hit, whilst the US lost a little bit of ground. Australian equities held their ground well, up almost 1.5% for the month.
Outlook – With a lot of mixed signals being sent over the past few weeks, it is hard to see what the short-term will hold. It is feared that imminent European elections will throw some unwanted spanners into the works, but from a long-term perspective, they are hardly a concern. Most of the market is expecting the bad news out of Europe to continue for some time and are still worried how that will affect others, especially China. But with Chinese efforts to open up their capital markets and currency increasing, this should provide some long-term stimulus to the Chinese markets and economy. In Australia, we look forward to the upcoming budget with bated breath, which will hopefully provide greater support to the case for RBA rate cuts and on top of that, a gradual softening of the $A (good for struggling parts of the economy, not good for retirees who like to travel).
S&P/ASX 200 – 12 months to 30 April 2012
Source: Core Equity Services