St George Economics economy and finance update
Stockmarket sentiment waned on Friday night. The US stockmarket finished weaker, after initially lifting with soft US economic data reducing Fed quantitative easing tapering fears.
Later in the session, however, risk aversion dominated on news the US will arm Syrian rebels. The Dow fell 0.7% and the S&P 500 and Nasdaq both lost 0.6% for the session.
US bonds edged higher (yields fell) after diminished risk appetites and reduced Fed tapering fears drove investors into safe haven government bonds.
The International Monetary Fund (IMF) downgraded its US growth outlook for 2014 which also provided support for bonds.
The Aussie dollar was broadly weaker against the major currencies, losing ground on Friday night as risk appetites diminished.
The Yen benefited from increased risk aversion and strengthened versus the Aussie and US dollars as investors questioned the Bank of Japan's commitment to aggressive monetary stimulus.
The oil price rose after news the US would send weapons to Syrian rebels raised concerns about oil supply from the Middle East. US dollar weakness was also supportive for oil prices.
There was no data released locally on Friday.
Euro zone inflation was unrevised for its final May release, with headline CPI up 1.4% in the year to May (up from 1.2% in the year to April), and core CPI up 1.2% in the year to May.
Euro zone employment fell 0.5% in Q1, its seventh consecutive decline and the steepest yet of the current recession.
The New Zealand business PMI rose from 55.2 to 59.2 in May, the highest in nearly nine years, and suggesting that the expansion in manufacturing activity is accelerating.
United States: Consumer sentiment fell from 84.5 to 82.7 in the preliminary June University of Michigan consumer sentiment survey, due to a fall in the current component, while the expectations component edged higher.
Producer prices rose 0.5% in May, after declining in March-April, with energy prices rising 1.3% after several months of decline and food prices up 0.6%, reversing most of April's fall. But falls in clothing and auto prices constrained the core rate to just 0.1% in May, the same as April.
The current account deficit widened (by US$3.8bn) to US$106.1bn, in Q1. This was much lower than expected due to back revisions which lowered the recent deficit profile.
Industrial production was flat in May as a small 0.1% rise in factory output was offset by a 1.8% decline in electric/gas utilities.