Good day! For our readers in China, we hope you get to enjoy the shortened May holiday week. For everyone else, including the markets who aren’t on holiday, let’s take a look at some of the current movements!
The US printed Q1 GDP at 2.5% and although this was expected to be higher it certainly beats the 0.4% they printed last quarter. The stock markets didn’t react too much to this and saw little movement throughout the week with the US indices all up about 1%. There has been a lot of focus on the consumer spending data and manufacturing data as these two sectors play tug of war which can influence and pull markets in both directions. Consumer spending both in the US and China have recently been helping boost markets but manufacturing data continues to be weak and has pushed commodities to some of their lowest levels in years.
Despite this, there does seem to be resilience in the commodity sector as prices have come back up since last week. There hasn’t been many changes on the economic data side so if you ask me, we’ve seen this price increase as a result of those people who are using the cheap prices to increase their holdings. For every time prices drop and buying starts, this is what brings the price back up! This to and fro may continue for a while but the focus should be for further down the road instead of getting caught up in the current conditions. It’ll certainly be interesting to watch some of the
commodity countries such as Brazil and Australia and their indications going forward. We’ve already seen both of them increase trade agreements with China so at some point we should see this beneficial play out but when that will be is up for debate and anyone’s guess.
Over in Europe the situation there hasn’t changed too much and we know it’ll be a tough hill to climb, but they’re climbing it. Hopefully they won’t see too many setbacks along the way, however expect to see some political and budget issues arise – much like we’ve seen in the past. It’s been hard on the global economy without the buying strength of Europe to support the overall economy but the hard measures put into place now, will hopefully help in the longer run.
With that said there seems to be both buying opportunities as well as hesitations within the markets, so be sure to keep a balanced portfolio.
For Austen Morris Associates’ investors – talk with your advisor about any repositioning to take advantage of markets at this time. For more information about Austen Morris Associates please visit our website.
Thanks for tuning in to this week’s Money Matters!
Darren Cox
Co-Head of Portfolio Management
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com
