The last month of the financial year was filled with volatility. In particular, developments in Greece and China wreaked havoc across markets and asset classes globally. As events unfolded over the month, risk assets such as equities sold off (more so in Australia than in other developed markets) and bonds rallied (bond yields falling lower). Fear of the negative impact on global growth was also reflected in commodity prices. In the instance of the recent oil price fall, its appears to be also partly driven by supply reasons with a resilient US shale oil market and potential Iran nuclear deal lifting sanctions on them exporting their oil.

Over the month of May, the UK general election, the Greek debt talks and the rally in Japanese and Chinese equities have all been topical issues. But we still would like to start our monthly market commentary with an update on the US economy, as the status of the US economic recovery and the timing of the first interest rate hike by the Fed are still at the forefront of most investors’ minds.

As discussed in last month’s Chart Book, we see the rising US dollar as posing a potential negative risk to US equities and earnings. And over the month of April, we are starting to see its impact flow through to economic data. For instance, the April manufacturing purchasing manager index (PMI), which measures manufacturing activity, albeit still at a high level was softer at 54.1 compared to 55.7 from a month ago. Digging deeper into the numbers, the “new export business” index subcomponent declined for the first time since November, likely partly driven by the stronger greenback.

As the new year gets underway, more central banks have joined in the monetary policy easing spree. Since the start of 2015, there have been more than 20 central banks cutting interest rates in both developed and emerging markets. The Bank of Thailand was the latest central bank to attempt to stimulate its country’s economy by lowering its policy rate by 0.25% to 1.75%.

Benign inflation caused by declining oil prices has partly allowed for this global easing bias. However, bucking the trend more recently, is Brazil (hiking rates by 0.5% to 12.75%) and Ukraine (raising rates by 10.5% to 30%!). Both countries raised their policy rates in an effort to curb spiralling inflation and plunging currencies.