Global Equities Lower On Mixed Data, Commodities Continue Rally, AUD Resilient Ahead of RBA & Federal Budget, ASX SPI200 Futures 6 Points Lower

Global equity markets were lower on Friday as a result of mixed economic data. Euro-Zone CPI (YoY Apr) came in less than forecast with a reading of -0.2% vs -0.1% expected while other data showed Euro-Zone GDP increased more than expected (QoQ) 0.6% vs 0.4% expected. European equity indexes were broadly lower, the DAX30 (-2.73%), CAC40 (-2.82%), Euro Stoxx 50 (-3.11) and the FTSE100 (-1.27%). US equities followed the European session lower amid mixed earnings and data that showed consumer spending in March came in lower than expected, the S&P500 (0.51%) and Nasdaq100 (-0.52%).

The US Dollar index continued a four month decline, finishing 0.72% lower on Friday helping to boost commodities and precious metals. Iron Ore (+5.31%), Copper (+2.07%), Natural Gas (+4.81%), WTI Crude (-0.29%), Brent Crude (-0.02%), Spot Gold (+2.15%) and Spot Silver (+1.66%). The first chart below shows the Thomas Reuters continuous commodity index now around the highest levels since October 2015, after putting in a significant low in January the index has rallied over 50% suggesting this is more than a bear market rally.

Looking to the local market the ASX200 closed higher on Friday, up 0.51% at 5,252, meanwhile ASX SPI200 futures are down 6 points suggesting a slightly weaker open this morning. Tuesday is a very important day this week, with the Reserve Bank of Australia rate decision at 2:30pm for which the market is currently pricing in a 55% chance of a rate cut to 1.75%. The second chart below shows the Australia Dollar which is trading somewhat resiliently ahead of the decision. Another factor on Tuesday that is likely to move the dollar is the Government budget where there are forecasts for policies including tax concessions for high-income earners savings for retirement, minimizing tax for multinational companies and raise the bracket for when a 37% personal income tax kicks in.

Data Releases:

·         TD Securities Inflation (YoY Apr) 11:00am AEST

·         NAB Business Confidence (Apr) 11:30am AEST

·         US ISM Manufacturing (Apr) 12:00am AEST

Source: Rivkin, Bloomberg, Updata

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via or by phoning +612 8302 3600.

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