Market Highlights - A look back at April 2018

Australian Economy – Although the long-term trend in unemployment is downward, a slight rise in the unemployment rate to 5.6% might be signalling a softening of economic growth1. Construction activity is showing signs of slowing, with the trend in building permit growth edging into negative territory. The Westpac-MI Leading Index (a short-term GDP growth gauge) is also showing worrying signs, with the index dipping back below 0%2.

Global Economy – As the tax reform measures start to have an effect on US corporate activity, proof of an increase in business spending is still elusive. US GDP was up a relatively mild 2.3%3 pa for the March quarter and employment growth has also been sluggish. As royal wedding preparations hit full swing, the UK economy seems less buoyant, with GDP growth for the most recent quarter coming in at a 6 year low of 0.1%3. Trump may have helped reduce tensions on the Korean Peninsula, but at the same time, his positioning towards Iran may be stirring tensions in the Middle East.

Investment Markets – The Aussie share market is still below where it started the year, but April provided some respite for domestic investors with equities up about 4%. Chinese and US markets were not so lucky, however, Europe and Japanese stock markets bounced back from a poor first quarter with returns around 5%4.

Outlook – Should the recent weakness of the Aussie dollar continue, any significant downturn in domestic economic fortunes may be avoided. This assumes of course that the main global economic powers of the US and China, see their way through any trade disputes and are able to afford continuing stimulatory measures.

S&P/ASX 200 – 12 months to 30 April 2018

Source: Core Equity Services

Footnotes: 1. Australian Bureau of Statistics; 2. Westpac; 3. TradingEconomics ; 4. Bloomberg data .

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