Financial markets were fairly subdued during May, although most equity markets managed to record modest gains for the month. The Australian market improved 2.3% on the back of strong returns from both bank and resource stocks. Lower impairment charges saw positive earnings revisions for the banking sector and a 7.3% gain for the month. Australian iron ore producers continue to benefit from strong Chinese demand, together with prices in excess of US $200 per tonne and production at near record volumes. Despite ongoing trade tensions with China, our trade balance has never looked healthier moving to an $8 billion surplus for April (up $2 billion from March) almost exclusively due to iron ore and coal exports to China. This is unlikely to change in the near term as there is simply no alternate market for China to receive the same quantity and quality of iron ore as Australia provides. A 7.4% increase in our terms of trade propelled Australia’s GDP 1.8% higher for the March quarter to now be 1.1% higher than at the onset of the pandemic a year ago.