Market & Portfolio Update - May 2021
Global share markets moved slightly higher during the month, driven by continued job growth in the United States, and business sentiment surveys remaining elevated.
May saw commodity prices continue their rise, with the price of oil reaching US$70 a barrel, its highest level since late 2018. Rising oil prices are usually a sign of good levels of demand from consumers, supporting economic growth.
The Australian share market was one of the better performing markets being made up of more ‘cyclical’ style sectors such as banks which tend to outperform during the recovery phase of an economic cycle. The New Zealand share market lagged in comparison, a result of Fisher & Paykel Healthcare’s financial results coming in behind market expectations (but still delivering an 82% rise in annual earnings thanks to strong demand during Covid-19).
While the Reserve Bank of NZ kept the Official Cash Rate (OCR) unchanged at 0.25% in May’s policy announcement, they took markets off guard a little by showing an expectation for the OCR to start increasing during the second half of next year. This would be an earlier rise than expected from most central banks around the world, again a sign of New Zealand’s relatively strong economic recovery so far.
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