December quarter growth in Australia exceeded market expectations and came in at 1.1% reversing the negative growth in September quarter. The market was expecting a growth of about 0.8% and hence the result was stronger. The terms of trade increased by 9.1% and household consumption contributed 0.5% to the results. The dollar soared to rise above US 77 cents but has now reacted to a likely increase in US rates discussed below.
Housing sector continues to be the risk - with varying schools of thought whether prices will continue to grow in Sydney and Melbourne or a correction is imminent. Loans are getting tighter particularly in the investor market and the Government are looking at providing some assistance to the first home buyers recognising that a social correction might be on the cards either via reduced tax incentives or via co-contribution. It is almost certain that there will be some budget measures on the housing sector in the May budget.
US rates are likely to rise if the inflation and employment numbers in the US continue to rise according to Fed Chair Janet Yellen. The US dollar rose following these comments resulting in the AUD falling to US 75 cents. US Treasury yields are rising as markets begin to factor in a possible rate rise in the US soon.
Housing sector continues to be the risk - with varying schools of thought whether prices will continue to grow in Sydney and Melbourne or a correction is imminent. Loans are getting tighter particularly in the investor market and the Government are looking at providing some assistance to the first home buyers recognising that a social correction might be on the cards either via reduced tax incentives or via co-contribution. It is almost certain that there will be some budget measures on the housing sector in the May budget.
US rates are likely to rise if the inflation and employment numbers in the US continue to rise according to Fed Chair Janet Yellen. The US dollar rose following these comments resulting in the AUD falling to US 75 cents. US Treasury yields are rising as markets begin to factor in a possible rate rise in the US soon.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore | As at 3-Mar 1.50 1.79 2.83 2.48 0.7562 0.7188 86.28 5.2170 5729 2383 21005 3218 55.90 1226 87.57 | As at 24-Feb 1.50 1.78 2.69 2.31 0.7717 0.7293 87.06 5.3015 5738 2367 20821 3253 55.99 1257 87.12 | 1 year ago 2.00 2.32 2.55 1.87 0.7365 0.6728 83.74 4.7996 5090 1999 17006 2874 38.72 1258 47.31 |
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