In summary After starting October on a cautious note, markets became a little more optimistic about global economic conditions as the month progressed. News that the US and China would sign the so-called “Phase 1” agreement in the trade dispute contributed to the markets’ improved mood, as did the Federal Reserve cutting the cash rate […]
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September 2019 Economic Snapshot

In summary September’s market action was in clear contrast to the previous month. August’s concerns about global growth, trade wars and geo-politics gave way to a somewhat more optimistic mood in which the relative performance of key asset classes was reversed. In particular, equities rallied while bonds and gold sold off in September. The seasonal […]
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August 2019 Economic Snapshot

September 5, 2019 / by Altitude Wealth Management / News / 0 Comments
In summary August was a turbulent month for global financial markets. The concerns that emerged at the end of July about the trade dispute between the US and China, and about how much the Fed might cut rates, all spilled over into August. Fears of global recession intensified, yield curves flattened even further and equity […]
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July 2019 Economic Snapshot

Economic Snapshot July 2019   In summary     July was all about interest rates, with the Reserve Bank and the Federal Reserve both cutting (0.5% in Australia and 0.25% in the US). Here in Australia, the cash rate and bond yields are at new record lows. The RBA said it will pause to assess […]
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Super Choices for employees

Super choices for employees July 2018 If you earn most of your income from employment, you may want to make personal deductible contributions – instead of, or in addition to, salary sacrifice.. Super options Since 1 July 2017, employees have been able to claim personal super contributions as a tax deduction. Like salary sacrifice, personal […]
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Super opportunity for first home buyers

Super opportunity for first home buyers June 2019 Eligible first home buyers can save for their deposit in the concessionally taxed superannuation system, using the First Home Super Saver Scheme (FHSSS or scheme). If you qualify, this scheme may help you accumulate a larger deposit when compared to saving outside super. Key dates Voluntary contributions […]
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May 2019 – Economic Snapshot

Click here: Economic Snapshot May 2019 final
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End of Financial Year Super Strategies

End of financial year super strategies The end of the financial year is a good time to think about how you could grow your super and get started with saving for retirement. Here are some options you could consider to help your super work harder for you. First home buyers You may be able to […]
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4 smart strategies for estate planning

We all live in hope that when we pass, we’re not forgotten. We’d also like to believe that the money we’ve worked so hard for will help to give our kids and grandkids a better life. But for those who don’t have a plan in place, and would rather leave this to chance, there is […]
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May Market Update

US President Donald Trump said he would withdraw the US from an Obama-era nuclear agreement with Iran, and restore economic sanctions, in a move that hurt investor sentiment. Mid-month, North Korea abruptly cut off talks with South Korea, citing military exercises between the United States and South Korea, and threatened to cancel the planned North Korea–US summit. President Trump promptly cancelled the summit, set for Singapore in June, but after a surprisingly conciliatory statement from North Korea, the summit was reinstated.

Simultaneously, trade talks got underway between the US and China, with each agreeing to drop the tariff threats against each other while they continued to work on an agreement. But if investors believed that put an end to trade war fears they were mistaken, as late in the month, the US announced tariffs on steel and aluminum imports from the European Union (EU), Canada and Mexico, sparking promises of retaliation by these parties and reigniting such fears.

European politics spurred market concerns

A political crisis in Italy caused plenty of worries, after two “anti-establishment” parties, the League and the 5 Star Movement, struck an unlikely deal to form a coalition government, only to have their proposed cabinet rejected by the Italian President, because it contained a candidate for Finance Minister who was a self-confessed supporter of Italy withdrawing from the European Union. The president’s intervention to block the coalition plans led to a big selloff in Italian shares and bonds, because of the threat of fresh elections that could have become effectively a referendum on the Euro, but after a reshuffle, the new Italian government was agreed on the last day of the month. Markets were also keeping a close eye on Spain, where Prime Minister Rajoy appeared on the brink of being ousted from office (which did in fact happen in early June.)

Positive US economic data buoyed markets, despite weaker European results

While the geo-political news took over the headlines in May, largely positive economic data and continued robust corporate earnings reports out of the US helped to bolster markets.

US first-quarter gross domestic product (GDP) growth was revised down marginally, from an initial estimate of 2.3% annual growth to 2.2%. While down from the 2.9% annual growth rate of the December 2017 quarter, the growth figure was well ahead of the 1.2% achieved in the March 2017 quarter.

The US unemployment rate fell to 3.9% in April, the lowest level since the end of 2000, with monthly jobs gains averaging 200,000 so far this year. US job openings rose to 6.7 million at the end of April, compared with the 6.3 million Americans who were unemployed, according to the US Labor Department. This is the first time since such record-keeping began in 2000 that the number of available positions exceeded the number of job seekers.

At the end of the eventful month, the Dow Jones Industrial Average had gained 1.4%, the broader S&P 500 was up 2.4% and the technology-heavy Nasdaq Composite index was 5.5% higher.

European data was slightly weaker, with the Eurozone posting a GDP growth rate of 0.4% in the first quarter, slowed significantly from an annual rate of 2.8% to 2.5%. The unemployment rate, however remained at its lowest level since December 2008, sitting at 8.5%. Late in May, the German jobs data report showed unemployment falling to a new record low of 5.2%. The UK economy grew at 0.1% in the March quarter, for an annual rate of 1.2%, its weakest pace since 2012.

In Germany, the DAX index was down marginally, while France’s CAC 40 shed 2.2%. The Stoxx Europe 600 Index ended May up 0.2%, after April’s jump of 3.9%. The Swiss Market Index (SMI) was down 4.8%. In the UK, the FTSE-100 index ended 2.3% higher, helped by a weaker pound.

Mixed returns from Asia

In Asia, first-quarter GDP data in Japan showed the economy shrinking by 0.6% on an annualised basis, breaking the streak of eight straight quarters of economic expansion. But Japanese industrial production increased in April, up 0.3% following March’s 1.4% gain, according to the Ministry of Economy, Trade and Industry.

Chinese factory activity grew at a stronger rate than expected in May, with the official manufacturing Purchasing Managers’ Index (PMI) coming in at 51.9, the highest level since October 2017. (A reading above 50 indicates expansion, while a reading below that signals contraction.) The private Caixin China manufacturing PMI, which focuses on smaller and medium-sized companies, held steady at 51.1 in May, bolstered by a pick-up in production and new orders. China’s official non-manufacturing PMI, a measure of services and construction activity, rose to 54.9 in May from 54.8 in April, the National Bureau of Statistics said. These numbers pointed to sustained growth momentum in China.

On Asian markets, Tokyo’s Nikkei index lost 1.2% in May, the Shanghai Composite index gained 0.4%, after touching a 19-month closing low late in the month, while Hong Kong’s Hang Seng Index retreated 1.1%. In Seoul, the KOSPI index lost 3.7%.

In Australia, the S&P/ASX 200 index added 1.1%. The Organisation for Economic Cooperation and Development (OECD) forecast the Australian economy to grow by 2.9% in 2018 and by 3% next year. The OECD expects unemployment to fall this year from 5.6% to 5.4%, and then to 5.3% next year.



Information current as at 31 May 2018. This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs having regard to these factors before acting on it. Past performance is not a reliable indicator of future performance. This article may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, we do not accept any responsibility for the accuracy or completeness of, or endorse any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.