US stocks fell on Tuesday as rising inflation in China led investors to expect further tightening in that country, prompting worries over the potential impact on demand for companies reliant on global growth such as Alcoa, 3M and Caterpillar. Questions over the European Union's bailout plan also weighed on investors.
Business confidence and job advertising weakened in April, signalling that a rapid increase in interest rates is now starting to cool the economy. Business confidence levels fell for the second consecutive month in April as sentiment across the retail, building and transport sectors soured, according to a survey by the National Australia Bank. NAB's monthly business survey found confidence in April fell 3 points to an index reading of plus 13, still above the long-run average of plus 7. Business conditions fell 5 points to plus 8, NAB said.
US stocks jumped on Monday, posting their biggest one-day gains in a year as a nearly $1tr bailout package to help stabilise Europe's debt crisis lifted a broad range of equities including Caterpillar, Bank of America and General Electric.
The Dow Jones Industrial Average rose 404.71 points (3.90%) to 10,785.14, snapping a four-session losing streak. It was the Dow's biggest one-day gain since March 23, 2009. The rise put the Dow back into positive territory for 2010 after it had slipped into the red late last week. The Dow is now up 3.42% for the year.
The Australian sharemarket had a volatile month in April, with the All Ordinaries Index decreasing 1.2% to close at 4,833.9 points.
International markets were also mixed. The Dow Jones Index closed up 1.4%, the FTSE closed down 2.2%, the Hang Seng closed down 0.6% and the Nikkei 225 closed down 0.3% for the month.
The total number of job ads in Australian newspapers and on the internet rose 1.8% in seasonally adjusted terms in March compared with the previous month to an average of 162,692 ads per week, contributing to an 8% annual increase, ANZ said.
The RBA raised its cash rate target a further 25 basis points to 4.25%. The fifth rise since October 2009, the gap between relative interest rates between Australia and other industrialised countries has widened further in 2010 as the economies of Europe and the US remain as yet subdued.
With a surge in revenue now about to wash into the economy on the back of sharply higher coal and iron ore export prices, the hike has brought rates back into what is a normal range just as economic growth strengthens according to the RBA.
The Australian sharemarket surged in March, with the All Ordinaries Index increasing 5.2% to close at 4,893.1 points. International markets were also higher. The Dow Jones Index closed up 5.6%, the FTSE closed up 5.9%, the Hang Seng closed up 2.5% and the Nikkei 225 closed up 9.6% for the month.