The Australian share market retreated in the month of April, with the All-Ordinaries index falling 2.7% for the month and closing at 7,932 points. The Australian dollar fell by 0.9% over the month with 1 Australian Dollar currently buying 64.77 United States cents.
Global share market returns were mixed in April, with the United States Dow Jones Index falling by 5.0%, the London FTSE gaining by 2.4%, the Japan Nikkei 225 falling by 4.9%, and the Hong Kong Hang Seng Index gaining by 7.4% for the month.
The Reserve Bank of Australia (RBA) board did not meet in April, with the next announcement on the RBA target Cash Rate scheduled for Tuesday next week. However, a higher-than-expected inflation reading for the March quarter is suggesting that any cut to the Cash Rate may be some time off.
The pullback in Australian and United States share markets over the month follows data confirming that the United States economy continues to fire with a higher-than-expected retail spending result (as shown in the chart below).
Source: tradingeconomics.com
While in isolation the above economic data is welcome news for investors (after falling away rapidly towards the end of 2024), the recent upswing in markets (+14% for the Dow Jones Index and +13% for the All Ordinaries Index since the start of November last year) is driven on the back of expectation of a change in central bank interest rate policy.
Economic data confirming the continued strength of the economy is a setback for those expecting central banks to pivot on rates in the immediate term – however for long-term investors, news that the United States economy continues to thrive despite rapidly increasing interest rates of the last 2 years can only be seen as positive.
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