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Market Wrap

February 2019

A mixed bag

  • After January’s bounce, February was a little quieter but still ended in positive territory, with global shares up by 3.4% and 5.6% in hedged and unhedged terms respectively.
  • US shares similarly were up 3%, a more modest rise than January’s 7.9% rally, which was driven by a better-than-expected US reporting season.
  • The full effects of the long US government shutdown are yet to be seen, but US GDP growth slowed significantly in the December 2018 quarter, to 2.6% following 3.4% growth in the September quarter.
  • Australian shares performed well – twice as well as US shares, in fact – up 6% for the month.
  • The RBA is currently forecasting growth of around 3% for the Australian economy in 2019, supported by increased business investment and public infrastructure spending.
  • In the eurozone, hopes for avoiding widespread recession seem to be pinned on a strong Asian recovery, while the Brexit issue continues to cloud the UK economy.
  • China-US trade relations have thawed somewhat, with Trump announcing that tariff increases on Chinese goods would be delayed, raising hopes that a trade agreement will be reached soon.
  • The Australian dollar slipped slightly against all the major currencies, down to US71c and €0.62 at the end of the month.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian
shares
6.0 6.8 7.3
Global shares (hedged) 3.4 2.4 9.4
Global shares (unhedged) 5.6 10.1 11.7
Global emergi- ng markets
(unhedged)
2.7 -1.3 9.0
Global small
companies
(unhedged)
6.3 8.8 11.1
Global listed property 0.2 15.9 8.6
Cash 0.2 2.0 2.1
Australian
fixed income
0.9 6.2 4.7
International fixed income 0.1 3.7 4.5

Source: JP Morgan & ANZ Wealth, 28 February 2019. Indices: Australian shares: S&P/ASX 300 Accumulation | Global shares (hedged/unhedged): MSCI World ex Australia Net | Global emerging markets: MSCI Emerging Markets Net in AUD (unhedged) | Global small companies (unhedged): MSCI World ex Aust Small Cap | Global listed property: FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged) | Cash: Bloomberg Bank Bill | Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index | International fixed income: Barclays Global Aggregate Bond Index (hedged). Please note: Past performance is not indicative of future performance

Currency

Exchange rates At close on 28/2 % change
1 month
% change
12 months
AUD/USD 0.71 -2.5 -8.6
AUD/euro 0.62 -1.8 -2.0
AUD/yen 79.0 -0.2 -4.6
Trade weighted index 60.5 -1.5 -4.6


Source: Bloomberg & ANZ Wealth, 28 February 2019.All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.