Australian Economy – There was some more good data for the Australian economy in May with the seasonally-adjusted unemployment falling to 5.7% and the trade surplus staying strong at over $3B. Inflation, which has remained steady over the past few years, continues to be well under control, a fact highlighted by the RBA's decision to keep rates on hold at 1.5%1.
Global Economy – Despite his flair for shaking things up, Trump's firing of FBI Director Comey still took the market by surprise and concern. On the economic front, the US economy continues to push along with unemployment near historic lows. Across the Atlantic, Macron's victory in the French election (and the rejection of the populist, Le Pen) was seen as a positive sign against the wave of nationalism and anti-globalisation.
Investment Markets – The start of May saw global equity markets ease off 1-2% as investors grappled with Trump's firing of the FBI director. However, most markets bounced back strongly and finished the month well into positive territory. The Australian economy was one major loser, down over 3% for the month3.
Outlook – The market might be hoping for a less eventful run-up and result in Europe's last major election of 2017, when Germany goes to the polls in September. Angela Merkel, who has been dubbed the new "leader of the free world", seems to have a very strong majority in the polls, and there isn't many expecting anything but another victory.
S&P/ASX 200 – 12 months to 30 May 2017
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor; 3. Bloomberg data.