Australian Economy – There was more surprise data out this month with both GDP and jobs impressing much more than expected. And this again came against the backdrop of a rate cut by the RBA. Most of the other figures our for the month were just as seemingly contradictory with retail sales, new home sales and exports all up, whilst consumer sentiment, new home construction and the current account deficit all moved in the other direction.
Global Economy – Europe looked to get their house in order as part 2 of the Greek elections yielded a pro-Euro coalition Government and EU leaders compromised for the sake of union. The US recovery continues to sputter along, with no definite direction up or down gaining any real traction. Chinese authorities have also continued to try and manage their economic slowdown with the central bank cutting rates for the first time since 2008 and further currency and foreign investment deregulation measures being introduced.
Investment Markets – Developed world markets bounced back from the depressed levels seen in April and May as hopes of some sort of resolution (i.e. greater Government stimulus) buoyed investor sentiment. The US, Europe and Japan all had strong 4-7% moves over the June trading days, whilst China and the developing world markets generally saw negative returns. In what is becoming a fairly reliable pattern, the Aussie share market finished about halfway between the 2 camps of the developed and developing world markets, posting a flat return for June.
Outlook – Have European leaders finally solved the Eurozone conundrum? Of course not. Are we due for a bit of a breather from the volatile ride seen over the past few months? Maybe. Though it is all anyone really talks about nowadays, one does hope the European drama will one day be a thing of the past like the Asian crisis of the 90's or the oil crisis back before smoking was considered bad for you. It does look as though Germany is gearing up to either foot the bill for sovereign debt "defaults" or to exit the Euro itself (probably the former), but all possible solutions is likely to bring investor pain in some form or the other. Globally, distractions such as the Olympics and the impending US elections are sure to take some of the media attention away from these European worries, which may provide some calm before the next proverbial storm.
S&P/ASX 200 – 12 months to 29 June 2012
Source: Core Equity Services