Australian Economy – Australia's unemployment rate improved slightly in the previous month, and has hovered around the 5.5% level now for over a year1. The latest GDP figures show that the economy has grown at an above-trend rate over the recent past, with GDP growth for the year coming in at 3.1%. However, the Westpac-MI Leading Index is forecasting a sharp slowdown over the next 6-9 months2.
Global Economy – The US economy is running hot with inflation over 2% and unemployment down at 3.8%1. As such, the Federal Reserve policy makers have signaled a more aggressive approach to raising US interest rates. Inflation in the EU is also on the rise, however, unemployment is still high at over 8%.
Investment Markets – Australian shares were among the best performing in June, up 3% for the month. Most other markets were flat, however, Asian emerging markets seem to have been hit quite hard from trade war fears. Hong Kong equities were down about 5% while Chinese shares retreated almost 8%3.
Outlook – Financial year returns for equities were broadly positive for the second year in a row. However, upcoming elections in the US might see White House chaos accelerate, and if so, market participants could be expected to retreat to safety.
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S&P/ASX 200 – 12 months to 30 June 2018
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Westpac; 3. Bloomberg data .