This week economic data has not underpinned an index trading at all-time highs.
The ongoing platinum strike has taken its toll on local economic activity, as Gross Domestic Product (GDP) for the first quarter decreased by 0.6%. The mining and quarry industry was the biggest negative contributor, followed by the manufacturing industry.
Negative growth over the quarter was not unexpected; however the figure was far worse than anticipated. Annualised figures for Last week’s CPI and this week’s PPI are at 6.1% and 8.8% respectively, showing inflationary pressures emerging while economic growth is negative.
This should leave the Reserve Bank hard placed for too hawkish a stance at future policy meetings, and perhaps rates could remain at current levels for an extended period of time.
In the US, m/m pending home sales and Core Durable Goods data fell well short of consensus forecasts while jobless claims showed less people than expected claimed unemployment benefits last week.
The most significant data point was the q/q preliminary GDP print which showed annualised growth to be negative at -1%, the figure can be partially attributed to poor weather conditions.
US markets finished stronger despite the news, as investor optimism increased in lure of accommodative benchmark lending rates perceived to have been granted a lengthened time horizon.