self-managed superannuation fund administrators

Market Wrap July 2018

Trade concerns flatten returns

  • Share markets delivered solid returns in June. However, the gap between robust returns across most developed markets and weak returns in emerging markets continued. Australian equities continue to perform strongly.
  • While the fundamentals remain supportive, steady tightening by the US Federal Reserve (Fed) and a further escalation in trade wars has dented returns, particularly for emerging markets which fell -1.8% this month.
  • Reflecting these concerns the Australian dollar has fallen sharply which contributed to the strong performance of unhedged global equities this month.
  • The strong returns in Australian fixed income reflected subdued Australian wages and inflation and expectations that the Reserve Bank of Australia will be on hold for some time.
  • US economic momentum has recovered solidly from the soft patch in the first quarter and this supported the Fed to tighten again.
  • Euro zone economic momentum has slowed likely reflecting the headwinds from a further escalation in trade wars.
  • The Reserve Bank of Australian left interest rates on hold. This reflected the balance of weak wages and inflation growth and a further softening in housing data. Despite these headwinds confidence measures remain above trend and the earnings outlook has brightened.

 

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a)
Australian shares 3.2 13.2 10.0
Global shares (hedged) 0.3 11.5 12.9
Global shares (unhedged) 2.3 15.4 14.9
Global emerging markets (unhedged) -1.8 12.3 9.6
Global small companies (unhedged) 2.1 19.2 16.6
Global listed property 2.7 5.5 9.4
Cash 0.2 1.8 2.2
Australian fixed income 0.5 3.1 4.4
International fixed income 0.2 1.9 5.0

Source: JP Morgan & ANZ Wealth, 30 June 2018.
Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Free Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, 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

  At close 30/06 % change 1 month % change 12 months
AUD/USD 0.74 -2.2 -3.7
AUD/Euro 0.63 2.1 -5.8
AUD/Yen 82.0 0.4 -5.1
Trade weighted index 62.6 -0.3 -4.4

Source: Bloomberg & ANZ Wealth, 30 June 2018. 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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Regards,

Jon.Rancie CFP ® Adv.Dip.FS (Financial Planning)

 

Authorised Representative

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jon@ranciefinancial.com.au

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