Market Wrap

Markets faltered…

  • The rally from December lows faltered in May with most equity markets down for the month.
  • Global shares were down 6% and 4.4% in hedged and unhedged terms, respectively.
  • Domestically, Australian shares outperformed international this month with 1.7% performance in May.
  • Australian communication shares rallied on the prospective takeover bid for Vocus by Swedish firm EQT Infrastructure.
  • The Australian dollar (AUD) fell against major currencies as the weaker economic results increased calls for interest rate cuts. A rise in global trade tensions also detracted from the dollar as it is treated as a “risk on” currency. In situations that suggest weaker economic growth the Australian dollar tends to struggle.
  • Fixed income and bond substitutes such as listed property rose in May as well both domestically and globally.
  • International fixed income was up after the increase in trade war tension between the US and China. The introduction of tariffs against Mexico as a real possibility added to these concerns of weaker growth. Disappointing flash PMI results added to concerns of weaker US growth seeing bond yields fall as a result.

With skewed economic news…


  • Chinese economic numbers disappointed expectations with weaker than expected retail sales and industrial production.
  • Global business surveys pointed to weaker growth with the Markit Global Manufacturing PMI slipping into contractionary territory.
  • The US Federal Reserve left interest rates on hold but took a dovish tone in recent remarks seeing markets price in rate cuts (with bond yields falling as a result)
  • Other central banks eased in May or in early June in response to a weaker global growth environment.


  • The Reserve Bank of Australia (RBA) responded to its labour market concerns and market pricing by cutting rates by 0.25% in early June. This confirmed market expectations that saw bonds be bid up and yields fall.
  • The unemployment rate rose slightly to 5.2% while leading business surveys suggest weaker employment growth ahead.
  • The Coalition government was returned to power with a slightly larger majority.

This saw an uptick in sentiment towards property markets with the correction in property prices continuing to slow. It also saw an uptick in business confidence to end the month as the Coalition was viewed more favourably in the private sector.

Major asset class performance

Asset classes 1 month % 1 year % 5 years (p.a.) %
1.7    11.1 7.7
Global shares (hedged) -0.6      0.6 8.4
Global shares (unhedged) -4.4 8.8 12.2
Global small
-4.9 0.0 11.7
-5.8 -0.3 8.0
Global listed
1.1 15.5 8.6
Cash 0.2 2.0 2.1
fixed income
1.7 9.0 5.0
International fixed income 1.4 6.0 4.7

 Bloomberg & IOOF, 31 May 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.  

Currency markets

Exchange rates
At close on 31/5

1 month
1 year
change  %
USD/AUD 0.69 -1.6 -8.3
Euro/AUD 0.62 -1.2 -4.0
Yen/AUD 75.1 -4.4 -8.8
Trade weighted index 60.0  -0.8 -4.5

Source: Bloomberg & IOOF, 31 May 2019. All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.  

Disclaimer: This information is current as at 31 May 2019 but is subject to change. This information has been prepared on behalf of Millennium3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252, a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, Millennium3 and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, Millennium3 and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. Millennium3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.