- Key economies have so far avoided a resurgence in COVID‐19 cases, but the World Health Organisation warned it continues to spread rapidly in some regions.
- Liquidity conditions remain favourable as central banks and governments continue to prop up economies via monetary and fiscal easing measures.
- Key indicators such as unemployment and PMIs improved in May, adding to the market’s hopes of a strong rebound, although the risk of further outbreaks remains.
- The Reserve Bank of Australia kept rates on hold at 0.25% at its June meeting and hit pause on bond purchases through May as markets recovered.
- Black Lives Matter protests in Australia may be used as a test case for considering whether large outdoor gatherings are safe to resume.
GDP for the March quarter showed the economy contracted for the first time since the March quarter of 2011, falling by 0.3% as expected, with the yearly rate falling to 1.4%. The result captured the beginning of the effects from the coronavirus‐driven restrictions, with household consumption falling for the first time in 32 years, down 1.1%, while both private and public investment also declined.
The number of new COVID‐19 cases appear to have passed their peak in many key economies, but health authorities continue to warn of a possible second wave. Geopolitical risks returned to the spotlight as tensions between the US and China escalated over Hong Kong, while protests and civil unrest in the US broke out as the country prepares for the presidential election in November.
There are early signs that the US economy is bouncing back, but there’s a long road ahead. Easing of some restrictions led to a pick‐up in in those sectors hit hardest by the virus, including leisure and hospitality, construction, and retail.
Across Europe COVID‐19 restrictions are slowly being lifted as governments attempt to strike the right balance to avert the worst of the economic effects. Schools, restaurants, hospitals and hotels are gradually reopening in many countries, and Germany is even set to remove its travel restrictions for 31 countries on 15 June.
In contrast to the US, which saw the largest rise in unemployment in the post‐war period, the COVID‐19 pandemic has made only a dent in China’s official jobless rate, which has risen from 5.2% in January to just 6.0% in May.
The Japanese economy contracted by an annualised 2.2% over the January to March period, less than the 3.4% suggested by the preliminary reading but slightly worse than the expected 2.1%.