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Europe continues to prosper with German unemployment touching a new low, and forward looking data (PMI) coming in stronger than expected. In fact, the PMI’s are now at 6 year highs, and inflation is starting to show. European equities were the best performer for March, showing a solid 5.7% gain and leaving the Euro stronger.
Britain triggered Article 50, which in essence begins a divorce from the European Union, a process which is expected to take 2 years.
The US Federal Reserve raised interest rates, which was largely expected. Longer term interest rates rose earlier in the month, but ease back on a less aggressive US Federal Reserve interest rate outlook, and partial wind back of Trump reflation trade expectations.
US equities hit record highs earlier in the month, but an unwind of the Trump trade later in the month as Obamacare survived left equities little changed.
The Australian dollar finished the month 0.6c weaker against the US dollar after dipping to 75c and then hitting high of 77.50c. Commodity prices weakened, and Oil finished almost 4% weaker at $50.60, iron ore fell -13%.
Australia’s economic data was mixed with unemployment pushing up from 5.7% to 5.9%, yet GDP (or economic growth) was stronger than expected at 1.1% for the quarter.
On the last few days of the month Tropical Cyclone Debbie (Category 4) battered the Queensland coastline, impacting heavily the towns of Proserpine, Whitsunday Islands, and Collinsville. This region is responsible for significant tourism, cane growing, and the Bowen Basin’s coal mines. It also hosts the important coal loading ports of Abbott Point, Dalrymple Bay, and Hay Point. The region represents 6% of global seaborn thermal coal exports, and 60% of global seaborne coking coal, and therefore likely to create supply disruptions in the short term. Inflation is likely to spike, and GDP slow for the first half.
