The European Central Bank cuts but signals the cycle is near an end. US markets were buoyed by a trade call between Presidents Trump and Xi - all eyes are now on payrolls data to gauge the Fed’s next move. Australian households remained cautious in April. New Zealand’s construction sector may have found a floor.
In our deep dive interview, ANZ Economist Vicky Xiao Zhou explains how ANZ Research developed a model to provide a more timely estimate of China’s export performance.
5 things to know in 5 minutes:
The European Central Bank cuts its benchmark rate 25 basis points to 2% as expected. ANZ Economist Bansi Madhavani says it surprised some by indicating the rate cut cycle was nearing an end. Meanwhile, the Presidents of the US and China held talks on trade overnight, initially buoying US stock markets.
Attention now turns to the US May non-farm payrolls report. ANZ International Economist Tom Kenny expects 120,000 jobs were added in the month. That’s close to consensus, but down from the 177,000 in April. Tom says that would still show a resilient-enough jobs market for the Fed to hold rates in coming months.
Australian household spending rose 0.1% in April, below the market expectation, as spending on goods such as clothing fell. ANZ Economist Aaron Luk says consumers are likely being cautious, rather than constrained.
Australia’s monthly trade surplus fell $1.5 billion to $5.4 billion in April as goods exports fell 2.4% and imports rose 1.1%. ANZ Senior Economist Adelaide Timbrell says there was a drop in exports to the US, although this wasn’t necessarily due to tariffs - non-monetary gold flows fell back after a spike in March.
A key component of New Zealand’s upcoming Q1 GDP - building work put in place - was flat during the quarter. ANZ Economist Matthew Galt says it appears the construction sector has found a floor after a large decline from a peak in 2022.
Cheers,
Alex (standing in for Bernard).
PS: Catch you next on Tuesday, June the 10th, following Australia’s King’s Birthday holiday on Monday. We’ll analyse the market reaction to the US non-farm payrolls data, including what it might mean for the US Federal Reserve.
