Australia Trade Surplus Smaller Than Expected

It was a quiet night overnight for equity markets although the FTSE 100 had a nice run to close 0.85% higher. Apple shares drifted slightly lower overnight after a 6+% jump the prior day on good earnings numbers. The ASX 200 recovered early losses yesterday to close down just 0.15% although today’s trading could be impacted by the Commonwealth Bank of Australia (CBA) which is facing fines for non-compliance with Australia’s Anti-Money Laundering laws overseen by the government agency Austrac. Fines could range in the hundreds of millions of dollars. CBA shares are currently matching for a 1.7% decline on the open and as the largest company on the ASX could have a significant impact on the index.    

Australia’s trade balance was released yesterday, showing a smaller surplus than expected but nevertheless a surplus. This marks the 8th straight month of surpluses which have helped bring Australia’s current account much closer to surplus with the first quarter current account showing the smallest deficit since 2001. The trade balance was impacted by a reduced volume of coal and iron ore exports while imports increased due to a large aircraft order and a jump in imports of industrial and telecommunications equipment.

The Bank of England kept rates on hold yesterday with only two of the eight members voting to hike rates, compared to three at the prior meeting. Uncertainty over the Brexit outlook was cited as a risk for the economy.   

       

Data Releases:

–    Australia RBA Monetary Policy Statement 11:30am AEST

–    Australia Retail Sales 11:30am AEST

–    US Non-Farm Employment Change 10:30pm AEST

–    US Trade Balance 10:30 AEST

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This article was written by William O’Loughlin – Local Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.