Market Wrap – May 2019 - Newcastle Financial Planning Group
skip to Main Content
Market Wrap – May 2019

Market Wrap – May 2019

Post Series: Market Wrap

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

Globally

  • 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%).

Locally

  • 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
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

Currency

Exchange Rates
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

Disclaimer: This information is current as at 30 April 2019 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), 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, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice 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. DJIB Investments Pty Ltd T/A Newcastle Financial Planning Group is a Corporate Authorised Representatives of RI Advice Group Pty Ltd. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.

Back To Top