Mining industry drags corporate profit figures down


Gross company operating profits fell 4.7% in the March quarter following a downwardly revised 3.6% decline in the December quarter. Company profits have declined in three out of the past four quarters. 

Weak mining profits weighed on corporate profits over the past year. For the year to the March quarter, company profits fell 8.4%.

Inventories were rebuilt in the March quarter, rising 0.4%. This was a little stronger than our own and market expectations. It suggests inventories will add 0-0.1 percentage points to GDP growth in the March quarter.

Share Markets:

With public holidays in the US and the UK, markets were quiet. In Europe, the German Dax rose 0.5% to a four week high in thin trade, the French CAC40 was up 0.3% and the Euro Stoxx rose 0.4%.

Interest Rates:

US physical bond markets were closed but futures did trade.

The implied yield on US 10 year government bonds rose 1 basis point to 1.86%. 

Market pricing for a Fed rate hike in June continued to hover around 30% while a July hike was given a 70% probability.

FOMC voter Bullard said in a Q&A session that there was a lot of key data ahead of the June meeting, global markets should be well prepared for a possible hike. He also said that the upwardly revised Q1 US GDP data was encouraging.

Foreign Exchange:

The US dollar index slipped from a two month high as the euro edged higher. The AUD moved higher against the USD but remained within the US71 cent range.

The AUD was steady against the euro but strengthened a touch against the NZD. The AUD was steady against the yen but slipped marginally against the UK pound.


Oil and gold were marginally weaker but the price of copper managed a 0.8% gain. The price of iron slipped back to $US51.27 per tonne but remains in the range seen over the past six trading days.


German CPI rose 0.3% in May, as expected, while the EU harmonised version rose 0.4%, taking the annual rate to 0.0%. Minor rebounds were also observed in other Eurozone countries.

Economic sentiment in Europe rose during May according to the European Commission indicator.  The index rose from 103.9 in April to 104.7 in May. Likewise, the business climate indictor rose from 0.13 to 0.26.

However, consumer sentiment in Europe remained weak with the Commissions indicator coming in at -7, the same as in April.


Retail sales were unchanged in April, after rising 1.5% in March. For the year to April, retail sales fell 0.8%.

United Kingdom:

Markets were closed for the Spring Bank Holiday.

United States:

Markets were closed for the Memorial Day public holiday.

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