Equity markets around the world have been subdued the past couple of weeks - with the exception of Australia - which was sold off partly due to the closure of stockbroker BBY.
The recent uplift in consumer confidence in Australia, brought about by the Federal Budget, wasn’t enough to stem the drop in equities.
Likewise, a Budget-related increase in business confidence is unlikely to translate into faster investment. The budget has generated some good headlines for the Treasurer, but at the end of the day the economy and job growth had already begun accelerating before the budget.
Looking beyond Australia to global economies, which seem set for another year of moderate growth.
Preliminary PMIs for May support the view that global growth is likely to pick up a bit this quarter but remain unspectacular. The preliminary PMIs for the US, China, euro-zone and Japan were almost unchanged. All this points to world GDP growth of 3 to 3.5% annualised.  This is close to the average for recent years.
Meanwhile, PMIs for the euro-zone echo the message from other surveys that GDP growth in the region will slow slightly in Q2.
Looking to China, we think it is likely to regain some momentum in the coming months as the authorities have taken monetary and fiscal action to avert a sharper downturn.
Finally, growth in Japan is sure to slow in Q2 as its strong performance in Q1 was largely thanks to a one-off surge in inventories.
Against this backdrop, most central banks will persist with ultra-loose monetary policy.
The major exception to moderate growth and loose policy is the USA, which is likely to outperform its global peers in 2015. The US Federal Reserve should begin raising rates later in the year, perhaps helping the dollar to appreciate further.
The USA did experience a slowdown in Q1 - however we think the main causes of this will prove to be temporary. In any event, the three-month annualised rate of core inflation hit a four-year high of 2.6% in April.  This leaves the Fed with less scope to delay raising rates.