Australian Economy – A strong GDP result of 1.1% for the March quarter began the month of June in high spirits1. However, the rest of the month and the lead up to the election proved to be somewhat quiet on the economic data front. Unemployment was steady, retail turnover was flat and prices were a little down.
Global Economy – Wages growth in the U.S. has finally started to kick in as unemployment remains below 5%3. Furthermore, manufacturing and factory orders showed improvement in May, with the U.S. economy moving along well. The big news for the month, however, came from across the Atlantic, with Britons voting to leave the EU. The vote, which will take years to fully implement, sent a quake through most of the world's equity markets, with European banks the hardest hit.
Investment Markets – Despite the large sell-off the followed the Brexit vote, some markets finished the month barely in the red. The S&P500 actually was up 0.09% in June and Australian equities were off just over 2%. European and Japanese equities were amongst the hardest hit in June, down about 6.5% and 9.5% respectively4.
Outlook – Even though markets have bounced back reasonably well from the Brexit sell-off, ramifications to global markets will likely reverberate for the foreseeable future, with rumours and negotiations leading to heightened volatility. A reasonable EU exit may see little drag to economic growth in both the EU and Britain, whereas political gamesmanship could see the region and perhaps the world hit with the next recession.
S&P/ASX 200 – 12 months to 30 June 2016
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. Westpac-Melbourne Institute; 3. Dept of Labour, USA; 4. Bloomberg data.