See below to find out how Australian and international share markets, bonds and currencies have been performing in recent months.
Global equity markets rebound - outlook still mixed
18 May 2018
Global equity markets gain in mixed political environment
Global equity markets rebounded over April. With a macroeconomic environment appearing more inflationary, bond prices were under pressure. Global bond markets declined 0.4% on an AUD hedged basis and US 10 Year Treasury yields touched 3% for the first time since 2014.
The political environment was mixed, with China responding to US tariffs, tensions in Syria seeing the oil price rise over 5%, and easing of tensions on the Korean peninsula.
Australia outperforms in April
The Australian market outperformed, with the ASX300 posting a monthly return of 3.8%. Aside from Financials, all sectors saw positive performance, with Energy, Materials and Health Care the standouts. The Royal Commission into Financial Services led to concern about possible constraints on financial institutions, with AMP and IOOF hardest hit. The RBA held rates at 1.5% for the 18th month in a row.
Currency, markets and global yields
The MSCI World Index ex-Australia (hedged into AUD) rose 2.0% over April. The AUD depreciated against the USD, as the market responded to higher US interest rates. However, the AUD appreciated against the Yen, the Pound and the Euro. In the US, the corporate reporting season saw over three quarters of companies beat earnings expectations. Results from large US technology stocks were exceptional, despite negative sentiment.
April yields rose across most developed markets, with the US 10-year yield (2.9%) higher than the Australian 10-year yield (2.8%) for the first time in 18 years. UK 10-year yields rose to 1.4%, Euro to 0.6% and NZ to 3.0%.
Sharemarkets struggle during March
As at 31 March 2018
US and Australian share markets
President Trump imposed tariffs on over $50bn of Chinese imports – the Chinese responded with tariffs on $3bn of US imports, sparking fears of a trade war. Further contributing to share market weakness were concerns regarding the 'FANG' stocks (Facebook, Amazon, Netflix, Google/Alphabet), which were sold-off sharply following Facebook's privacy breach.
The US share market (S&P 500) slid 2.7%. Due to the broad-based growth observed in the US economy, the Federal Reserve raised rates by 0.25% to a target range of 1.5% to 1.75%. These factors impacted global markets, as the MSCI ex-Australia (hedged) returned -2.2%.
In Australia the ASX 300 fell by 3.7%, negatively impacted by global markets and data indicating slowing growth. The RBA left the cash rate on hold at 1.5% for a 17th consecutive meeting, citing subdued wage growth and low inflation.
The yield on 10-year Australian and NZ Government bonds fell to 2.6% and 2.7% respectively. Elsewhere, US 10-year yields fell to 2.7%, UK 10-year yields fell to 1.4%, German 10-year yields fell to 0.5% with Japan remaining broadly flat.
Source - JANA
Markets volatile during February
4 April 2018
Share markets volatile
Global share markets pulled back in February as investors worried the US Federal Reserve may raise interest rates faster than previously anticipated. This led to a rise in volatility, as measured by the CBOE Market Volatility Index, which spiked to levels last seen in mid-2015.
The US share market fell nearly 9% early in February before finishing down 3.7% for the month. This was against a backdrop of continued strength in economic data. Jerome Powell gave his first address to Congress as the newly appointed US Federal Reserve Chairman, suggesting there could be as many as four interest rate hikes in 2018.
Australian share market makes small gains
The S&P/ASX300 Accumulation Index rose 0.3% over the month. Small Cap stocks (0.0%) underperformed the broader market, while Large Caps (0.8%) outperformed. Healthcare (7.0%) and Consumer Staples (2.1%) were the strongest performing sectors, whilst Telecommunications (-6.2%) and Real Estate (-3.2%) were the weakest. The RBA held the official cash rate at 1.50% for the 13th consecutive month.
Australian dollar and bond markets
The Australian dollar depreciated against most developed market currencies, declining 5.9% against the Yen, 3.8% against the USD and 1.7% against the Euro.
The yield on 10-year Australian Government bonds held steady at 2.8% during February, while the 10-year yield in NZ rose to 3%. Elsewhere in the world, US 10-year yields rose to 2.9%, whilst remaining broadly flat in the UK, Eurozone and Japan.
Source - JANA