Markets continue to recover…
- The rally from December lows has flowed into April with most markets positive.
- Global shares were up 4.6% and 3.9% in a hedged and unhedged terms, respectively.
- Domestically, Australian shares continue to lag international this year with 2.4% performance during April.
- Weaker commodity prices outside of oil and iron ore and, weather disruption to business operations for major producers weighed on Australian mining shares.
- The Australian dollar (AUD) fell against major currencies as the weaker inflation result increased calls for interest rate cuts.
- Fixed income and bond substitutes such as listed property lagged in the latest month after a strong year.
- International fixed income was flat after a US growth surprise and US interest rates staying on hold (if rates fall, bonds are more attractive than cash because their rates are fixed, increasing their value).
With mixed economic news…
- The US economy surprised forecasts for March growth as did Europe.
- Some of the US surprise is seen as temporary with the base case for growth to slow this year.
- The US Federal Reserve left interest rates on hold disappointing bond investors (by letting cash stay more competitive with rates at 2.5%).
- The Reserve Bank of Australia (RBA) outlined the case for a rate cut unless further jobs growth sees unemployment fall.
- It backed this view up with weaker economic forecasts for 2019.
- Inflation disappointed domestically with only 1.3% growth in the year to March (The RBA targets 2-3% inflation)
- The labour market continues to perform well with jobs growth surprising and the unemployment rate at 5% as of March.
- However, some forward indicators point to potential for some job losses in line with a slowing economy.
- The weaker housing market continued with national prices falling 0.5% in April and also showing up as a drag on inflation.
Major asset class performance
|Asset classes||1 month %||1 year %||5 years (p.a.) %|
|Global shares (hedged)||4.6||14.3||13.6|
|Global shares (unhedged)||3.9||8.4||10.3|
| Global small |
| Global listed property |
| Australian |
|International fixed income||0.0||5.0||4.7|
Source: Bloomberg & IOOF, 30 April 2019 Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD Please note: Past performance is not indicative of future performance
| Exchange |
|At close on |
|1 month |
| 1 year |
| Trade |
Source: Bloomberg & IOOF, 30 April 2019. All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance