International News (Issue 402) – 3 June 2016

There wasn’t a lot to talk of from offshore markets this week beyond the usual slew of monthly economic data recording the previous months activity.

Like Australia, Chinese and US economic growth is muddling along without much vigour, but equally without any innate weakness.

Given recent weakness in the Chinese Renminbi, it will be interesting to see next week’s release of monthly Chinese FX reserves. Any further attrition here will open up for escalating concerns on the sustainability of China’s continued economic rebalancing.

In the US, manufacturing activity has been improving alongside this year’s trend for a weaker US-dollar, but elsewhere conditions are indifferent.

Consumer confidence has eased back to near 18 month lows, but this is in spite of continued and seemingly sustainable strength in housing markets.

In a fortnight, the Federal Reserve meet and there is the small potential rates there will rise.

Elsewhere in the world, including Australia, the trend remains for lower or easier monetary policy, with the ECB this week again confirming there is more they can do to counter weak growth in the Eurozone.

In spite of increasing caution on behalf of investors, the S&P500 remains within 2% of its record high.

Though it seems the majority of investors are cautious on the outlook for equity markets – including ourselves – we choose to be patient and not in any desire to chase these highs.

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