The global economic recovery stalled during the June quarter as United States and European economic data pointed to a slowing in economic conditions.
In the United States, while unemployment continued to fall, GDP growth for the March quarter was revised down to a 2.9% contraction, driven by weak investment, declining inventories and a negative export contribution. Despite ongoing monthly cuts to the US Quantitative Easing bond buying program, the US Federal Reserve signalled their intention to maintain near-zero short-term interest rates throughout 2014.
In Europe, while there were signs of a pick-up in activity in countries worst hit by the Eurozone’s interlinked government debt and banking crises, activity slowed across the Eurozone’s core, including Germany, Austria, and the Netherlands. In France, activity contracted.
In Asia, improved data and a series of mini-stimulus injections by the Chinese Government reduced fears that the Chinese economy would experience a significant slowdown due to a cooling property market. However, confidence in the Japanese recovery stalled, following a recent increase in sales tax.
The Australian economy lost some momentum during the June quarter, with the slowdown a result of a combination of factors, including negativity surrounding the Federal Budget, weakness in China, commodity prices and the stubbornly high Australian Dollar. Against a soft economic backdrop, the Reserve Bank left the cash rate unchanged at 2.5%, throughout the quarter.
Full Article: July 2014 Investment Market Review (PDF)