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Australian economy, Fixed Income, news, Global economy
A reasonably dull month on markets, with Aussie stocks left little changed as with cash and bonds. Broader developed market equities also rallied, closing 2.4% higher.
The US S&P 500 lifted 2%, helped by a “dovish” US Federal Reserve. Fed comments coupled with a weaker inflation print, caused the USD to weaken, leaving the AUDUSD exchange rate 3c higher at nearly 80c. US Stocks hit record highs during the month, as the volatility index (VIX) fell to its lowest level since 1993.
Australia’s Reserve Bank minutes caused markets to finally acknowledge that this is the low in interest rates. Comments that 3.5% (200bps higher than the current 1.50%) as a “neutral” cash rate, pushed the Australian dollar higher in minutes.
The Bank of Canada (not unexpectedly) raised interest rates 25bps. The first hike since 2010.
Broader developed markets also rallied, with stocks closing 2.4% higher. Stronger European economic data lifted longer term bond yields.
Commodities finished stronger, spurred on from the weaker USD. Iron ore rallied 15% during the month to $73 mt/US, gold added $25, and oil closed $4.70 stronger at $52.60.
