Daily Market Commentary 1st June 2022

An ocean of economic data releases overnight, in Europe, the USA and Asia, all overshadowed by the inflation numbers out of Europe. Hopes of ‘peak inflation’ were quickly dispelled, as inflation surged across Europe and the threat of a recession is becoming a reality. To combat this crises the European Council decided to impose further suicidal sanctions on the ‘resource super-power Russia’, which is their major supplier and further antagonise the situation. European Inflation has surged to 8.1%, from the last reading of 7.4%, with energy exploding by 39.2%! To combat this crises, the genius leaders in Europe, have decided to impose an oil embargo on Russia, making an impossible situation worse. The destruction of the European economy is upon them and it is all self-imposed. Inflation soared among member nations, with numbers exploding in France, Italy and Austria, while PPI numbers are cataclysmic. Political ideology rules in the current crop of European leaders and they are destroying European industry and citizens standards of living. European Bond Yields rose on the news, while the EUR fell back to 1.0730, while the GBP dropped to 1.2500.

Canadian GDP contracted sharply, ahead of expectations that the Bank of Canada will raise interest rates by a further 50 basis points. Canada, the USA, Australia and New Zealand all seem to be on the same path in the interest rate cycle, battling rampant inflation and hurtling towards recession. New Zealand Business Confidence collapsed, plunging to minus 55.6, while Building Permits contracted 8.5%. Australian Building Permits also fell 2.4%, as the leading sector experiences shocking input cost rises and construction companies are now falling like flies. The AUD fell back to 0.7150, while the NZD slipped back below 0.6500.

Markets will be watching the Bank of Canada rate decision and narrative, while local markets will keenly await the Australian GDP number to be released today.