Australian Economy – Good retails sales figures and a drop in the unemployment rate early in the month seemingly impugned the RBA's earlier decision to slash rates. Other data released through the month wasn't as flattering, with housing still in the doldrums and manufacturing struggling. The drop in both interest rates and the exchange rate may not have immediate effect, but this is expected to provide some good support for the economy going forward.
Global Economy – Greek and French elections played havoc with the financial heart strings of the world with the non-result out of Athens leaving most unsure of whether Greece is coming or going. Spain's financial system has hit the wall with the Spanish Government forced to step in and raising the question about how far Germany will be willing to go to save the Euro. Softer numbers out of the US and a continued slowing in China didn't help matters, but it is yet clear whether any major downturns are on the cards for the world's 2 biggest economies.
Investment Markets – "Sell in May" did not disappoint with a poor April followed up by 31 days of dismal returns. All the major equity indices were down around 7% with the one bright spark being China, which managed to eke out a small gain on the month. The large unknowns out of Europe became that much more larger over the past month and are expected to be around for a while yet.
Outlook – The "will they, won't they" rhetoric making the rounds in relation to Greece and maybe Portugal and Spain is keeping most of the investment world on the edge of their proverbial seat. A real nail biter. Greece has its election reruns coming up and though the short-term pain will be reduced by staying with the Euro, the Greeks might surprise us all by actually make the seemingly right long-term decision and head back to the drachma. What effect this might have on markets is anybody's guess, but I'm sure everyone will be happy to have this whole thing resolved one way or the other.
S&P/ASX 200 – 12 months to 31 May 2012
Source: Core Equity Services