Category Archives: Market Updates

Lonsec Market Commentary – September 2017

Lonsec Market Commentary – September 2017 

The Australian market had a fifth month of negative or flat growth in September, with the ASX 200 Accumulation Index returning -0.02% as commodity sectors pulled back.

At its October meeting the RBA left the cash rate on hold at 1.50%.

The unemployment rate remained steady at 5.6%. The participation rate remains high in historic terms, moving higher in trend terms throughout 2017 and sitting comfortably above 65%.

‘Globally, the MSCI World Index gained 0.68% in AUD terms, supported by US and European shares’.

Australian consumers still struggling to stay positive. ‘The Westpac Melbourne Institute Index of Consumer Sentiment rose 2.5% from 95.5 in August to 97.9, but pessimists still outnumber optimists’. There are concerns around interest rates, deteriorating housing affordability and rising energy prices these are impacting the level of confidence, offsetting the improved outlook for employment.

Lonsec Market Commentary – September 2017

(Lonsec September 2017, Issue Date: 11-10-2017)

Lonsec Market Commentary – August 2017

Lonsec Market Commentary – August 2017 

 Australia has had GDP growth and continued to have improvement within the labour market. The economy appears well positioned despite wage weakness as the economy grew by 0.8% in June quarter and 1.8% over the year to date. The unemployment rate down from 5.7% to 5.6%.

The Reserve Bank of Australia (RBA) is placing emphasis on employment, indicating that labour market growth should result in improvements in wages over time. The main concern is maintaining a balance between stimulatory monetary policy and the medium-term risk of high and rising household debt.

An appreciating dollar over recent months, is likely to contribute to subdued price pressures and it seems like interest rates are to stay on hold for some time yet to come. The Reserve Bank left the cash rate on hold at 1.50% at its September meeting, where it has remained since the downward move in rates one year ago. In addition, low petrol prices have contributed to lower inflation, with prices at the pump down 15c/litre nationally since early June 2017.

Australia’s consumer sentiment struggling to stay positive. The Westpac Melbourne Institute Index of Consumer Sentiment fell 1.2% in August from 96.6 in July to 95.5. Households are feeling the squeeze, with concerns regarding interest rates and housing affordability. Changes to sentiment in August may be due to recent mortgage rate increases, as the major banks raised rates on interest only mortgages in late June.

In the United States, the S&P 500 gained 0.96% in AUD terms as the global equity markets are challenged with geopolitical tension originating from the Korean peninsula.

The MSCI Word Index gained 0.85% in AUD terms, which was significantly influenced by Asian markets.

‘The S&P/ASX 300 A-REIT Accumulation Index returned 1.51% in August after coming under pressure in July. Overall, there was solid reporting in regards to A-REITs, as there was a strong demand for quality real estate boosting asset values, NTAs and continued strength in Sydney and Melbourne office markets.

Global REITS were slightly lower for month of August. REITs have generally been held back by growth sectors such as offices, malls and hotels. Low volatility remains, although a structural fall in volatility could boost valuations and risk-adjusted returns.

China recorded GDP growth of 6.9% in Q2 2017, which was enough to ward off fears of a slowdown and satisfied officials that efforts to tighten lending have not been detrimental to the economy.

‘Commodities had a bumper month in August, driven higher in the wake of North Korea’s missile tests’.

Lonsec Market Commentary – August 2017

(Ref: Lonsec August 2017, Issue Date: 08-09-2017)

Lonsec Market Commentary – July 2017

Lonsec Market Commentary – July 2017 

The Australian market experienced a flat month in July, down 0.01%, with gains from the Materials and Financials sectors propping up the index.

Overall the Australian economy appears well positioned with an improving employment situation, strong manufacturing growth, and a robust retail sector. However, the improved employment outlook contrasts with the lack of growth in wages, which remains at a record low, which is a universal phenomenon in developed markets.

The Australian Dollar (AUD) rose 3.8% against the United States Dollar (USD) in July, from 0.7689 to 0.7980, reaching its highest level since May 2015.

As its August meeting the Reserve Bank of Australia (RBA) left the cash rate on hold at 1.50%. The RBA noted that inflation continues to run below the 2% target, with higher prices for electricity and tobacco expected to boost CPI in coming months. However, working in the other direction is increased competition from new retail entrants – a reference no doubt to Amazon’s imminent arrival on Australian shores

Global equities – The S&P 500 TG Index gained 1.93% in USD terms and pushed to a new record high, but fell 1.94% in AUD terms as the USD weakened. The Dow Jones Industrial Average pushed above 22,000 points for the first time, with no small thanks to Apple, which jumped 3.27% in USD terms before hitting a new record high in early August.

Global shares, measured by the MSCI World Index, were down -1.59% in AUD terms, with the Japanese and German markets being the contributors. The DAX fell 3.90% as a crisis erupted in Germany’s automotive industry, with the big five (Audi, BMW, Daimler, Porsche and VW) pressured with multi-billion euro fines for cartel behaviour by the European and German competition authorities.

(Ref: Lonsec July 2017, Issue Date: 09-08-2017)

Lonsec Market Commentary – July 2017

Lonsec Market Commentary – April 2017

Lonsec Market Commentary – April 2017

Full-time employment continues to grow after falling through much of 2016, increasing  by 74,500 in March, while part-time employment fell by 13,600.  The employment-to-population ratio appears to have steadied at around 61%.

The advance estimate of US Q1 GDP showed annual growth at 0.7%, down from 2.1% recorded in Q4 2016 and considerably lower than the consensus estimate of 1.2%.  Consumer spending – the main engine room of the economy – rose only 0.3% versus 3.5% in Q4, representing the worst performance since 2009.

The price of iron ore delivered to Qingdao in China tumbled 14.4% in April after falling 11.9% in March, ending the month at US $68.80/t, much reduced from its February high of $94.86.

To read more about local and international market affairs you can read the April 2017 Lonsec Market Commentary here:

Lonsec Market Commentary – April 2017

Lonsec Market Commentary – March 2017

Lonsec Market Commentary – March 2017

The Australian market powered on through March, returning 3.32% during the month, with all sectors gaining.

In the US, markets moved slightly higher, with the S&P 500 TG Index gaining 0.90% in AUD terms, while the Dow Jones Industrial Index was down 0.30%.

On 4 April, the RBA left the cash rate on hold at 1.5% where it has been since the August 2016 cut.

The unemployment figures for February showed an increase in employed persons of 5,200 in trend terms, although in seasonally adjusted terms employment fell by 6,400.  The good news was the resumption of growth in full time employment, which rose 27,100 in seasonally adjusted terms, following January’s fall of 44,800.

To read more about the current market, please click on the link below;

Lonsec Market Commentary – March 2017

Lonsec Market Commentary – December 2016

Lonsec Market Commentary – December 2016

The Australian market ended on a high note, with the Santa rally in full swing.

The US market still appears unbreakable, with the S&P 500 TG Index adding 4.05% in December.  Valuations, while not at egregious highs, are making investors wary.

With a paucity of local data over the Christmas break and no RBA meeting in January, investors were allowed a short reprieve from the flow of economic releases, giving them time to get their heads around 2017.

To read more, click on the below Lonsec Market Commentary for December 2016;

Lonsec Market Commentary – December 2016

Lonsec Market Commentary – October 2016

Lonsec Market Commentary – October 2016

The Australian market sold off in October, with the S&P/ASX 200 following US indices down to end the month at 5,229.00 pts. All sectors suffered, with the exception of Materials, which was able to add to large gains over the past five months, returning 1.29% in October, while the Financials sector produced a small positive return of 0.76%, with modest gains from the big four.

Global shares were down in October, with a gradual sell-off in the US and renewed pressure on the UK market. Europe’s largest shares managed to bounce back from recent falls, allowing the European index to finish in positive territory. Global shares, measured by the MSCI World TR Index, returned -1.36% in AUD terms, while the S&P 500 TG Index returned -1.27%, with some pre-election nerves making themselves felt throughout the month

Read more in the link below

lonsec-market-commentary-october-2016

Lonsec Market Commentary – August 2016

Lonsec Market Commentary – August 2016

Lonsec Market Commentary – August 2016

After the RBA cut interest rates to an historic low of 1.50% Australian markets dipped over the month, finishing down at the end of August.

The largest gains over the month were in the technology, energy and consumer staples sectors.

International markets remained quiet with most global equity indices relatively flat over the month.

For the full summary, you can read the August Lonsec Market Commentary here:

Lonsec Market Commentary – August 2016

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Lonsec Market Commentary – July 2016

Lonsec Market Commentary – July 2016

All sectors of the Australian market were up across August, with the largest gains seen in Consumer Discretionary, Consumer Staples and Materials.

Global markets were calmer over July, especially compared with the anxiety caused in June from Brexit.

The RBA dropped the cash rate to 1.5% in early August, meaning the cash rate has now been kept below 3.00% for 38 consecutive months. This has been largely due toWith continuing weak inflation figures and emerging downside risks in the global economy.

For the full summary, you can read the July Lonsec Market Commentary here:

Lonsec Market Commentary – July 2016

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Lonsec Market Commentary – June 2016

Lonsec Market Commentary – June 2016

Lonsec Market Commentary – June 2016

Australian shares fell over June, largely due to the impending Brexit. The largest falls were in the Information Technology, Financial and Consumer Staples sectors.

We not only felt the impact of Brexit but also political uncertainty as the federal election campaign continued. Despite this, inflation remained low and the RBA left the cash rate on hold again. Employment also rose, as did retail sales.

Concerns over Brexit affected global markets significantly as the effects on markets in the short and medium term are difficult to gauge.

The Australian Dollar rose again the US Dollar, Euro and Pound over the month.

For a full summary and more information about Brexit, you can read the June Lonsec Market Commentary here:

Lonsec Market Commentary – June 2016

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