EWA rises 4% this week as investors trade on positive sentiment
Australian markets continued to rally for the third straight session on June 7, 2016. This came after the Reserve Bank of Australia (or RBA) kept interest rates constant in its monetary policy meeting, which was widely expected. The rise of more than 1% in the iShares MSCI Australia (EWA) got the overall rally this week to more than 4% as investors remained bullish on a recovery in the Australian economy.
EWA has risen approximately 4.5% since the beginning of the second quarter. GDP growth and an increase in exports have been higher than the forecast. The current interest rate of 1.75% is seen to be at a comfortable level to push inflation levels upward.
Markets rally despite fall in construction index as crude oil rises
The Australian construction PMI (Purchasing Managers’ Index) declined to 46.7 in May 2016 against 50.8 in April. However, the decline didn’t have any effect on Market indexes, which continued to gain last Wednesday. A rise in crude oil prices (USO) also strengthened commodity currencies such as the Australian dollar, the New Zealand dollar, and the Canadian dollar.
New Zealand indexes rise ahead of RBNZ meeting
New Zealand indexes were trading higher this week ahead of the monetary policy meeting by the Reserve Bank of New Zealand (or RBNZ) on Wednesday. The rally was driven by speculations of a rate cut by Governor Graeme Wheeler to boost depressed inflation levels and aid economic growth.
Asia-Pacific (VPL) (AAXJ) indexes were also trading on a higher note. The iShares MSCI Emerging Markets ETF (EEM) was trading higher on Tuesday, June 7, in line with its peers. The ETF has risen by almost 4.5% since the beginning of the month.