In the United States, the S&P 500 finished May at a record high. Investors shrugged off global risk points, including tensions in Eastern Europe and China, to focus on an improving US economy. While the US March quarter GDP proved to be soft, reflecting very poor weather and an inventory drawdown, recent economic indicators were more supportive. Employment grew strongly and consumption, manufacturing and housing start indicators all beat consensus forecasts.
Generally, European equities grew more modestly over the month. Growth remains sluggish and private credit growth continues to contract. Very low inflation prompted expectations of more accommodative monetary policy, which has now been delivered.
Australian data was mixed, with softer-than-expected retail sales and private capital expenditure largely offset by strong employment growth. The Australian budget set a sombre tone for most of the month, with the Coalition announcing the most restrictive budget in years. While measures had been broadly negative for consumer confidence, one of the few implications was for healthcare, with proposed Medicare co-payments. Elsewhere, share price performance was mixed with resources weak and banks moderately positive overall.
The Australian Dollar was relatively flat over May, with a peak of US$0.9410 and low of US$0.9203 for a monthly rise of 0.3% relative to the US Dollar.
Australian residential property values recorded their first monthly decline since May 2013, falling 1.9% over the month. Most capital cities recorded a price fall with Melbourne prices down by 3.6%, Sydney prices down 1.1% and Brisbane’s prices 1.3% lower in May.
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