In a continuation of the optimistic market trend where many countries are showing signs of a steady recovery from the coronavirus pandemic, today Australia published its GDP growth reports for the first quarter of 2021, which were better than the forecasts.
Australia’s prospects are further boosted by the country’s natural resources. Its lands offer high reserves of both lithium and nickel, which are important industrial metals, especially vital to battery-making. Tesla spoke about buying materials from Australia earlier this week and companies from other countries are likely to do so as well.
Judging by the good fundamental prospects of Australia, as well as its key position in global trade, it is quickly making it to higher spots on the list of countries that will recover from the pandemic soon and who might need to switch to hawkish monetary policy before the rest of the world.
Aside from this data, there will be a bunch of reports with a medium degree of importance, with just some Federal Reserve speeches and the Fed’s beige book being of any interest. In other words, today is a bit of a rest day for fundamentals compared to the start and the end of the week, which are quite busy.
Stock markets will also likely be a bit sluggish today on account of the big data coming up tomorrow and on Friday. Tech-heavy indices will trade a bit lower today, but overall we don’t expect any dramatic swings up or down until tomorrow’s reports start filing in.
One development to follow in emerging markets is the monetary policy of Turkey. The country saw inflation climb above 17% in May, way above the targets that are healthy for the economy. However, President Erdogan previously fired the head of the Turkish central bank who tried to tighten policy to balance inflation, so it remains to be seen how the new head will deal with the challenge of inflation getting out of control. The Turkish lira, unsurprisingly, has weakened.
