June 2017 Market Outlook for Australia

A certain degree of heightened global uncertainty continues to be a backdrop for the Australian economy. Despite this, most sectors have been able to shrug off this impact and record growth, albeit modest. The economy is recession free, with low unemployment rates and decent export earnings. Here are some of the market-moving indicators to look out for in June.

June 1: China’s Caixin Manufacturing PMI (May)

The Caixin Manufacturing PMI for China had declined to 50.3 in April, from 51.2 in March, missing market expectations of 51.2. The figure marked the weakest expansion in factory activity since September 2016. The forecast is for an improvement in the figure to 51.8.

June 2: US Unemployment Rate (May)

US unemployment rate had declined to 4.4% in April, from 4.5% in March. This was better than the forecast of a rise to 4.6% and April recorded the lowest jobless rate since May 2007. However, the market expects the unemployment rate to rise to 4.7% in May.

June 6: RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) had left its cash rate unchanged at a record low of 1.5% at its May 2 meeting, while forecasting an increase in economic growth to above 3% over the next two years, accompanied by low inflation. Expectations are for the RBA to keep the interest rate unchanged at 1.5% at its June meeting.

June 7: Eurozone GDP Growth Third Estimate (Q1)

The Euro Area had recorded GDP growth of 1.7% year-over-year in the first quarter of 2017. The third estimate for the same is widely expected to remain unchanged.

June 8: Australia Balance of Trade (April), China Balance of Trade (May), ECB Interest Rate Decision

Australia’s trade surplus narrowed 15% to A$3.11 billion in March, from A$3.66 billion in February. With exports rising less than imports, the trade surplus missed expectations of, which were at A$3.4 billion. Meanwhile, China’s trade surplus also declined to US$38.5 billion in April, but remained above the market estimates of US$35.5 billion. In a recent report, China’s Ministry of Commerce projected the country’s exports and imports to stabilise and improve in the near future. The European Central Bank (ECB) had held its benchmark refinancing rate unchanged at 0% for the tenth straight meeting in April. The June meeting is unlikely to deliver a change in this rate, amid persisting uncertainty surrounding the economic prospects of this region.

June 9: China Inflation Rate (May)

China’s consumer prices rose 1.2% year-over-year in April, marking the highest inflation rate since January and beating market expectations of a 1.1% gain. The forecast for May continues to be at 1.1%.

June 14: Australia Consumer Confidence Index (June), Australia Business Confidence (May), Fed Interest Rate Decision

Australia’s Consumer Confidence had declined to 97.99 in May, from 98 in May 2016. For June, Consumer Confidence is widely expected to decline from the June 2016 figure of 99.1. On the other hand, Australia’s Business Confidence Index had surged to 13 in April, from 6 in March, to reach its highest reading since March 2010. Although business confidence is supported by expectations of an acceleration in economic growth in the second half of 2017, the index is expected to record a decline to 10.31 in May. The Federal Reserve had left its federal funds rate unchanged at a range of 0.75% to 1% at its May meeting, in-line with market expectations. Policymakers are widely expected to increase the rate to 1.25% in the upcoming months.

June 15: BoE Interest Rate Decision

The Bank of England’s (BoE) Monetary Policy Committee had left the benchmark bank rate at a record low of 0.25% at the meeting on May 11, in-line with expectations. Policymakers are widely expected to keep the rate unchanged at the June meeting.

June 16: Australia Unemployment Rate (May)

Employment in Australia had risen by 37,400 in April to 12,099,300, missing market estimates of a 50,000 gain. Expectations are for a relatively more modest increase of 15,400 in May. Australia’s seasonally adjusted unemployment rate had unexpectedly fell to 5.7% in April, from 5.9% in March, marking the lowest jobless rate since January. For May, the figure is expected to remain unchanged at 5.7%.

June 20: RBA Meeting Minutes

The outlook for the Australian economy continues to suggest low interest rates. The market does not expect the Reserve Bank of Australia (RBA) to change its monetary policy at this meeting or anytime soon.

June 22: New Zealand Interest Rate Decision, Eurozone Consumer Confidence (June)

The Reserve Bank of New Zealand had kept its official cash rate unchanged at a record low of 1.75% in May, in-line with expectations. Comments from policymakers over the past couple of months have been neutral and the central bank is widely expected to keep interest rates unchanged at 1.75% in June.

June 29: Eurozone Business Confidence (June)

The Business Climate Indicator for the Euro Area had surged to 1.09 in April, from 0.83 in March, handsomely beating market expectations of 0.82. This marked the strongest figure since April 2011. The market consensus for business confidence for June is at 1.12.

June 30: UK GDP Growth Rate Final Estimate (Q1)

The British economy grew 2.1% in the first half of 2017, accelerating from 1.9% in the prior quarter. The figure is expected to remain unchanged.

References

https://www.fxstreet.com/economic-calendar

http://www.tradingeconomics.com/australia/calendar

http://www.tradingeconomics.com/new-zealand/calendar

http://www.tradingeconomics.com/china/calendar

http://www.tradingeconomics.com/euro-area/calendar

http://www.tradingeconomics.com/united-kingdom/calendar

http://www.tradingeconomics.com/united-states/calendar

https://www.investing.com/analysis/australian-stock-market-outlook—forecast-for-2017-200180974

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