St George Economics economy and finance update
Sentiment was bolstered by stronger US home sales, news that Italy had formed a new government and on hopes that the European Central Bank (ECB) will lower interest rates.
Share markets rose, with the S&P500 closing just below its intraday high earlier in the month.
For the session, the Dow and S&P500 rose 0.7% and the Nasdaq lifted 0.9%. In Europe, the positive developments in Italy and rate cut hopes saw the Euro Stoxx rise 1.3%.
US treasuries were little changed, despite the positive mood supporting share markets. Low inflation and stimulatory monetary policy are helping to keep a lid on yields.
The better risk environment saw the US dollar weaken against most currencies.
The euro strengthened on the formation of a coalition government in Italy, while the Australian dollar tracked equity markets, rising back above 1.034.
Commodities rose, supported by the lift in sentiment and a weaker US dollar. Oil, copper and gold prices were all higher, and continue to
There were no domestic data releases yesterday.
The euro zone economic confidence and business climate index were both lower in April.
The business climate index fell from -0.75 to -0.93, while the economic confidence index fell from 90.1 to 88.6. Both have fallen two months in a row, reversing the optimism at the turn of the year.
German inflation fell from an annual pace of 1.4% to 1.2% in the year to April, its lowest since Sep 2010.
It provides some downside risk for the CPI estimate due out tonight. The consensus forecast is for a 1.6% annual rate in April, below the ECB's 2 percent inflation target, and will heighten calls for the ECB to cut interest rates when it meets on Thursday. However, analysts are still divided as to whether or not the ECB will cut rates.
UK house prices rose 0.2% in the year to April according to the Hometrack survey, its first positive annual growth pace since 2010.
The core PCE deflator was flat in March, although there were upward revisions to the January and February results to 0.183 and 0.066 respectively.
US pending home sales rose 1.5% in March from a downwardly revised decline of -1.0% in February (previously -0.4%).
The March sales result was the highest level of sales since the home-buyer tax credit boosted the market temporarily in late 2009 and early 2010.
The US Dallas Fed factory index plunged from 7.4 to -15.6 in April, its first sub-zero reading for the year. It adds to other indicators of that activity has weakened into the second quarter of this year.