Australian Economy – Mainly stronger news for the month, including a surge in March quarter exports, GDP for the quarter at a better-than-expected 1.1%1 and a rise in job ads, helped contribute to growing consumer and business confidence. This data was somewhat dampened by a small rise in unemployment along with sluggish retail sales, but the main concern for most has been the continuing fall of the iron price, which will likely be a drag on the economy.
Global Economy – With 217,000 new jobs created in the previous month2 the US has finally regained all those lost in the Great Recession. And with manufacturing growing strongly and consumer confidence picking up an acceleration in economic activity may be on the cards following years of sub-par growth. Europe, on the other-hand, seem to be about 2 years behind the US and, except for the likes of Germany and the UK, are still trying to keep their heads up and out of recession. China and Japan seem like they have turned the corner out of deceleration, with strong production and exports figures, also helping to provide support to the global growth engine.
Investment Markets – Australia was once more the laggard of global equity markets, finishing down for the month of June, while most others were flat or up3. Overall it was a good year for equities, with Australia, Japan and Hong Kong shares all up about 10-12%, and US and European markets up over 20%3.
Outlook – A new wave of destabilisation has swept through Iraq, and along with ongoing issues in Ukraine and Syria, these threaten to cause some concerns for the global economy. And with markets having enjoyed somewhat low volatility and strong recent returns, fears over asset overpricing and bubbles are becoming more common. A correction from these levels would not be a surprise.
S&P/ASX 200 – 12 months to 30 June 2014
Source: Core Equity Services