Australian Economy – Budget night came and went with most taxpayers only marginally affected. A surplus was also predicted to be achieved earlier than forecast, with the Australian economy set to be in a healthy growth state for the next couple of years. Data, which shows unemployment to be pushing a little higher1, however, might hinder some of the optimistic growth projections.
Global Economy – With US unemployment dropping below 4%2 and economic growth pushing along, it seems that the current president has the liberty to continue to do or tweet whatever he wishes. Some of his rhetoric may have paid off with the Koreas giving some credit to the recent simmering of tensions on the Peninsula. The threat of trade wars again reared its head with Trump slapping steel tariffs on friend and foe, and the threat of real war in the Middle East spiked as sanctions were 'unlifted' on Iran.
Investment Markets – European stocks took a hit3 as fears over the threat of a populist, and anti-EU, government in Italy grew. Most other markets were up marginally for the month, despite Trump's best efforts to send share prices into tailspin on the last day of the month with his new tariffs.
Outlook – The response by other nations to Trump's steel tariffs, will keep the market on edge for yet another month. The bond market is already predicting troubles in Europe with yields on Italian and German bonds jumping. Though the global economic picture continues to look mildly robust, any number of geopolitical events threaten to derail the whole thing.
S&P/ASX 200 – 12 months to 31 May 2018
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. TradingEconomics ; 3. Bloomberg data .
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