St George Economics economy and finance update

Share Markets:

Trading was quiet in markets last night with the UK and US on holiday.

Sentiment generally continued to be weighed down by events last week, although a report that the European Commission was considering a softening of deficit rules may have helped support European shares.

The Euro Stoxx gained 1.1%.

Shares were generally weaker in Asian trade yesterday led by a sharp 3.2% drop in the Nikkei following comments from the BoJ governor (see below for details). Meanwhile, the ASX200 lost 0.5% yesterday.

Bonds:

Australian bonds were stronger yesterday (yields fell), with sentiment still fragile.

Last night, yields on German bunds rose following an improvement in risk appetite. Demand for Italian and Spanish bonds partially recovered. Ten-year bond yields on both declined 9 basis points after jumping last week. 

Foreign Exchange:

Currencies traded in a narrow range with the US dollar was little changed against most currencies.

The Australian dollar remained close to 0.965 on the continued speculation the Fed would wind back asset purchases.

Commodities:

Brent oil crude futures fell, with weaker economic data last week continuing raise concerns about demand, while gold prices rose.  

Australia:

No domestic data was released yesterday.

China:

Industrial profits for the January to April period increased 11.4% on the same period last year, down from annual growth of 12.1% in the January to March period.

Japan:

The Bank of Japan (BoJ) Governor has said that interest rates could rise between one and three percentage points in an improving economy (growth and inflation) without causing instability.

United States:

US markets were closed for Memorial Day holiday.

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The information contained in this report (the Information) is provided for, and is only to be used by, persons in Australia. The information may not comply with the laws of another jurisdiction. The Information is general in nature and does not take into account the particular investment objectives or financial situation of any potential reader. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the Information without first seeking expert financial advice. For persons with whom St.George has a contract to supply Information, the supply of the Information is made under that contract and St.George's agreed terms of supply apply. St.George does not represent or guarantee that the Information is accurate or free from errors or omissions and St.George disclaims any duty of care in relation to the Information and liability for any reliance on investment decisions made using the Information. The Information is subject to change. Terms, conditions and any fees apply to St. George products and details are available. St.George or its officers, agents or employees (including persons involved in preparation of the Information) may have financial interests in the markets discussed in the Information. St.George owns copyright in the Information unless otherwise indicated. The Information should not be reproduced, distributed, linked or transmitted without the written consent of St.George.


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