• In Australia, the major economic news was the release of the quarterly Consumer Price Index (CPI) which came in at -0.2% over the quarter and 1.35% total for the year (which is well below the expected trend rate). The fall in the CPI coupled with the fact that the inflation rate is well below the RBA target trend rate, prompted the RBA to officially cut cash rates (in early May) to 1.75%. the RBA noted that inflation is expected to remain well below the target range in its foreseeable future in addition to Australia’s moderating growth outlook.
• Australian shares continued their upward trend through April, largely due to rallies in the materials and energy sectors. The major catalyst for this rally was the large rebound in commodity prices, in particular iron ore as prices continue to stabilize. Globally, equity markets moved higher on the back of dovish comments from the US Federal Reserve regarding further rate rises in the near term and a weaker Australian Dollar.
• The Australian bond market rallied through April, due to the weaker than expected March CPI data and the official cash rate cut. Globally bonds were marginally higher, however with more negative interest countries, the outlook points to muted investment returns looking forward.
• Listed property continued its positive performance through April, however underperformed the broader equity markets.
• The Australian Dollar (AUD) was weaker over the month, down slightly to US 0.76c on the back of negative inflationary data. The likelihood of further Australian cash rate cuts combined with stabilisation in the US Dollar will continue to put downward pressure on the AUD.
• After a very difficult few months, commodities continued their upward trend with most markets moving higher. Improving Chinese economic data, demand and rising inventory levels underpinned the upward movement.
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