Volatility has returned to global markets, driven by trade war fears and negative sentiment towards the big US tech companies.
And that volatility weighed on Australian consumer sentiment in the second half of March, according to the weekly survey conducted by ANZ and Roy Morgan.
The survey’s measure of consumer confidence fell by 1.6% last week, driven by a more pessimistic view towards the broader economy. That followed a 0.9% decline in the week prior.
“Confidence slipped further last week likely following the decline in global and domestic equities,” said David Plank, ANZ’s Head of Australian Economics.
“Markets remain spooked about a possible escalation between US and China in the trade space.”
Views towards current economic conditions edged higher, but that followed a hefty 6.1% fall in the week prior. And the reading for future economic conditions dipped for the second straight week.
“The fall in economic sentiment likely reflects the uncertainty generated by the dispute around global trade policy and the impact this is having on equity markets,”
“Aggregate confidence in economic conditions has fallen to its long run average for the first time this year,” Plank said.
While fears of an escalating US-China trade war eased somewhat into the end of last week, the Trump administration rolled out the full list of Chinese imports — worth around $US50 billion — that will be subject to a 25% tariff.
The rise in market volatility means daily moves in US stocks of at least 1% are now a common occurrence, when they were rare in 2017.
The other readings in last week’s survey were also “largely negative”, ANZ said.
Households’ views towards current financial conditions fell by 0.8%, following a 3.1% decline in the previous week. And sentiment towards future economics followed up last week’s 3.6% fall with a 1.1% drop.
“Aggregate confidence in financial conditions remains more elevated and is still well above its long-run average, however. The ongoing strength of the labour market is likely a factor in this,” Plank said.
At a headline reading of 115.5, the consumer confidence index dipped over the month but remains above its long-term average of 112.9.