Oliver's Insights
Oliver's Insights is special commentary by Dr Shane Oliver, Chief Economist and Head of Investment Strategy, on issues and trends affecting the economy and financial markets.
Oliver's Insights
Europe, China, the US - the worry list for investors getting wider again
17 May 2012
- This year seems to be following the pattern of the last two years with a solid start in share markets followed by weakness commencing around April/May. Europe again is a key driver with fears of an imminent Greek exit from the euro and worries about Spain. Since their highs this year global shares have fallen 8% and Australian shares have fallen by 5.5%.
- Key differences compared to the last two years (where share markets fell by around 15-20% from April/May highs) including a stronger US economy (particularly the housing sector which is looking more and more like it is starting to recover), global monetary easing and cheaper share markets hopefully should help limit the downside in shares and should help result in much stronger share markets by year end.
View Europe, China, the US - the worry list for investors getting wider again (PDF - 93 Kb)
2012-13 Budget – back to surplus. The great fiscal, monetary switch
9 May 2012
- The Australian Government’s Budget forecasts a $1.5 billion surplus for 2012-13, with savings focussed on defence, foreign aid, the public service, large companies and high income earners via a doubling of the contributions tax on super but handouts for low to middle income earners.
- By sticking to the surplus timetable, the Government will further boost foreign investor confidence, provide flexibility for future fiscal stimulus if needed and further enhance the ability of the Reserve Bank of Australia (RBA) to cut interest rates.
- The negatives in the Budget are the abandonment of company tax reform and more changes to superannuation.
- On balance, the implied policy switch towards tighter fiscal policy and easier monetary policy is a negative for the $A, but probably a positive for Australian shares.
View 2012-13 Budget – back to surplus. The great fiscal, monetary switch (PDF - 85 Kb)
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