The Reserve Bank of Australia cuts 25 basis points, but considered a 50-point cut amid global uncertainty, sending the Aussie dollar down overnight. US stocks fall amid budget concerns. China cuts key lending rates, and Asian exports surge through April.
In our deep-dive interview, ANZ Head of Australian Economics Adam Boyton explains why he expects the Reserve Bank of Australia will next cut rates in August.
5 things to know in 5 minutes:
US stocks were down around 0.4% at 4am Sydney/Melbourne time as traders grew wary of ongoing US budget negotiations. Meanwhile, ANZ Head of G3 Economics Brian Martin says rising cost expectations in the Philadelphia Fed’s non-manufacturing survey in May point to ongoing FOMC caution on rates.
The Reserve Bank of Australia yesterday cut the cash rate 25 basis points to 3.85%, as expected. ANZ Head of Australian Economics Adam Boyton says the tone in the post meeting statement was more dovish than the market had been expecting.
Ahead of the RBA’s decision, ANZ Roy Morgan Australian Consumer Confidence rose again last week, by 0.5 points to 88.8. ANZ Economist Sophia Angala says the rise was led by household confidence in the next 12 months.
The People’s Bank of China cut key 1- and 5-year lending rates by 10 basis points yesterday, to 3.0% and 3.5%, respectively. ANZ Senior China Strategist Zhaopeng Xing expects there is more to come, particularly after Chinese banks cut deposit rates by a larger amount.
Export data for Asian economies continued to show surges in April, with data yesterday showing Malaysian exports beat expectations at 16.4% growth year-on-year, while Taiwan’s export orders were up 19.8%. ANZ Head of Asia Research Khoon Goh says that’s due to front-loading of goods to the US.
Cheers,
Bernard
PS: Catch you tomorrow with more analysis of global trade flows in April.
