Business confidence slipping away again

Australia:

Business confidence dropped back in the March quarter according to the quarterly NAB business survey. 

The survey painted an ongoing picture of a 'patchwork' economy with the retail and construction sectors being relatively optimistic but with weaker confidence in the mining and wholesaling sector. 

The aggregate index of business confidence fell for 2 in the December quarter to zero in the March quarter. A zero result indicates an equal number of pessimists and optimists.

Share Markets:

Financial market sentiment was broadly stronger, despite a run of disappointing US economic data.

The Nasdaq closed at a record high, while the Dow Jones and S&P500 also rose. Energy stocks were supported by a lift in oil prices. Meanwhile, the German DAX fell, possibly reflecting the ongoing concerns regarding Greece.

Interest Rates: 

Yields on US treasuries fell in reaction to the economic data overnight, which suggested that the loss of momentum in the US economy earlier in the year was continuing.

Australian 3 and 10-year bond yields (based on futures) were relatively unchanged overnight at 1.89% and 2.52%, respectively.

However, it followed a lift in yields in yesterday.

Foreign Exchange:

The US dollar weakened against a basket of currencies as US economic data disappointed.

The euro consequently jumped more than 1 per cent and the Australian dollar rose to around 77.8 UScents. Comments by the RBNZ Assistant Governor that NZ would maintain a stimulatory monetary policy saw the NZD slip against USD and AUD yesterday.

Commodities:

Most commodity prices rose. Oil prices lifted to their highest level this year on tensions between Saudi Arabia and Yemen. Gold prices also rose, helped by the weaker US dollar and soft economic data. 

China:

The flash HSBC China Manufacturing PMI slipped to 49.2 in April down from 49.6 in March.

The decline supports the decision by the Peoples Bank of China to ease monetary policy last Sunday, and keeps alive the prospect of more to come.

Europe:

Eurozone PMI composite for April slowed from 54.0 to 53.5, its first decline since November. Both services and manufacturing indices declined- the Eurozone factory PMI slowed from 52.2 to 51.9 while services slipped from 54.2 to 53.7 in April.

Worries regarding Greece and slower Chinese growth could be some of the factors at play.  

The German consumer confidence index from GfK for May edged up from 10.0 to 10.1, a new decade high.

New Zealand:

Consumer confidence picked up in New Zealand during April. According to the ANZ measure, confidence rose from 124.6 in March to 128.8 in April.

The long run average of the index is 119 with data beginning in 2004.

The confidence survey of 1,009 people found a net 12% felt they were better off financially than this time last year, up from 9% in March.

Keeping the New Zealand economy buoyant will be the demand from a net increase in permanent immigrants of 5000 in March for an increase of 56,275 for the year.

A total of 51% of the new migrants stated they planned to live in Auckland.

United Kingdom:

UK retail sales fell 0.5% in March, reversing most of its revised 0.6% increase in February. It points to a weak result in consumer spending towards the end of first quarter.  

United States: US new home sales fell 11.4% in March following a revised 5.6% gain in February. Sales however, were up 19.4% from a year ago, and the trend points to upward momentum in the US housing market.

US initial jobless claims edged up 1k to 295k for the week ending 18 April and have now remained below 300k for seven consecutive weeks. It continues to signal a healthy labour market.

US PMI factory index by Markit fell from 55.7 to 54.2 in April. 

It adds to other indicators that are signalling an ongoing loss of momentum in the US economy, and might suggest that some recent weakness was not only due to one-off factors.

The Kansas City Fed factory index fell from -4 to -7 in April the lowest since early 2013.


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