Market Wrap

March 2020

Flight to safety globally

  • Global shares fell -8.5% and -4.9% in hedged and unhedged terms, respectively. Emerging markets were relative outperformers (only down -1.6%) with COVID-19 (a.k.a. coronavirus) outbreaks outside of China and their economic impact a driving concern for global share markets.
  • Domestically, Australian shares underperformed international markets falling -7.7% in February. This was driven by weakness in the Energy and Technology sectors with economic growth concerns seeing oil prices fall 13.1% during the month.
  • The Australian dollar (AUD) fell against major currencies by -1.9% attributable to expectations of weaker Chinese growth from the coronavirus and weaker domestic economic data.
  • Fixed income assets rallied with growth concerns from the virus outbreak outside of China the key driver.
  • Another factor was expectations of further interest cuts domestically and internationally (if rates fall on cash in a savings account a bond offering a fixed rate becomes more attractive with investors buying and pushing its price higher. This saw a continuation of positive returns for both domestic fixed income and international fixed income.

As the coronavirus outbreak figured prominently on investor radars…


  • Global business surveys softened with the JP Morgan Global Manufacturing PMI falling into contractionary territory (pointing to weaker economic growth).
  • Spikes in COVID-19 notably appeared outside of China with South Korea, Italy and Iran now prominent hotspots.


  • Australian economic growth for the December quarter surprised slightly at 0.5% (consensus: 0.4%) thanks to weaker import spending and stronger inventory and consumption (driven by sales events such as Black Friday).
  • The RBA cut the cash rate by 0.25% to a new low of 0.5% citing concerns over the coronavirus economic impact.
  • The virus outbreak is expected to have a notable impact on economic growth with Tourism Australia citing a 10% decline in bookings from China following Australian government travel bans until early March.
  • The labour market disappointed with the unemployment rate rising to 5.3%, some 0.8% higher than the RBA target of 4.5%.

Major asset class performance

Asset classes 1 month
1 year
5 years (p.a.) %
Australian shares -7.7 8.6 6.2
Global shares (hedged) -8.5 4.4 6.9
Global shares (unhedged) -4.9 15.6 10.2
Global small companies (unhedged) -6.3 6.5 8.8
Global emerging markets (unhedged) -1.6 8.3 6.8
Global listed property (hedged) -8.1 2.2 4.1
Cash 0.1 1.3 1.9
Australian fixed income 0.9 9.0 4.4
International fixed income 1.2 9.3 4.5

Source: Bloomberg & IOOF, 28 February 2020 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 29/2 1 month
1 year
USD/AUD 0.65 -2.6 -8.2
Euro/AUD 0.59 -2.1 -5.4
Yen/AUD 70.4 -3.0 -11.0
Trade weighted index 57.0 -1.9 -6.1

Source: Bloomberg & IOOF, 28 February 2020. All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.    

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