Market Highlights - A look back at June 2017

Australian Economy – With GDP growth of 0.3% for the March quarter1, Australia will officially take the title of the longest run of consecutive quarters without a technical recession (defined as back-to-back quarters of negative GDP growth). After running large trade surpluses for a number of months, exports faltered in April sending the trade balance back towards zero. However, this is likely to recover and assist in keeping the GDP economic streak going.

Global Economy – Despite full employment in the US, wages growth has settled back down from the encouraging increases seen in 2015/162. Economic activity in the US continues to impress with production and new orders both showing signs of acceleration. Against this backdrop, the Fed has continued to signal further rate hikes and winding back of the treasury balance sheet. Across the pacific, China has also delivered promising numbers, with GDP growth for the last quarter coming in above target. And in the UK, a surprise election result has added even more pressure to the Brexit process.

Investment Markets – For the most part, markets jumped around mildly in the month of June, with US and Aussie equity markets ending the month where they started. Europe and Japan, however, were both off about 3%, though the latter was up about 30% year-on-year3.

Outlook – Monetary policy settings will be the thing to watch for most of the rest of the year. With the US, Europe and UK all hinting at tighter conditions in late 2017, capital market watchers will be jumping at signs of sustained increases in long-term bond yields.

S&P/ASX 200 – 12 months to 30 June 2017

Source: Core Equity Services

Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor; 3. Bloomberg data.

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