Growing concerns about a slowdown in global economic growth preoccupied financial markets in March. The US Federal Reserve now forecasts no rate rises in 2019 instead of the two it previously planned. US 10-year government bond yields fell below 3-month yields on the news. This ‘inverted’ yield curve is viewed by markets as an historical predictor of recession.
In Australia, economic growth slowed to 0.2 per cent in the December quarter, for an annual rate of 2.3 per cent. This was reflected in the more cautious mood of business and consumers. Both the weekly ANZ-Roy Morgan consumer confidence rating and the monthly Westpac-Melbourne Institute survey of consumer sentiment fell below their long-term average in March. While the NAB business confidence index fell to a 3-year low of 2.0 point in February.
On a positive note, unemployment fell to a 10-year low of 4.9 per cent in February. Australia’s trade surplus rose to a 2-year high of $4,549 million in January, with exports up 5 per cent and imports up 3.3 per cent. Our trade surplus with China reached a record high, due largely to a 33 per cent increase in iron ore prices over the past year to around US$86.50 a tonne. Corporate Australia is also doing well, with record profits up 10.5 per cent in the year to December. The Aussie dollar rose slightly to US71c.
Read more from our April 2019 update here:
- Federal Budget 2019-20 Analysis
- What will the Federal Budget mean for you?
- The mental mechanics of procrastination
- Franking credits on the chopping board
Contact us on 0883620060 to discuss your existing financial plan