Category Archives: Market Updates

Lonsec Market Commentary – November 2017

Lonsec Market Commentary – November 2017 

The Australian share market looks set to finish 2017 on a positive note, with the S&P/ASX Accumulation Index gaining 1.64% in November, albeit under-performing global stocks.

In a continuation of October’s trends, the leading sectors were again Information Technology (+4.48%) and Energy (+4.15%), which has recovered from a mid-year slump to resume its rally. Similarly, Telecommunications (-1.60%) was at the bottom of the heap and the only negative sector.

The Australian economy grew at just below its trend growth rate in the September quarter, supported by a boost in consumer spending. While advanced economies including the US, Europe, Canada and the UK have begun the task of tightening policy, monetary conditions remain expansionary.

The RBA has maintained the cash rate at 1.50% for well over a year, and appears content to wait and see how high other banks go and how quickly.

In the meantime, the RBA’s growth forecast of 3.0% over 2018 is realistic, but may be a touch on the optimistic side. While there has been continued improvement in business conditions and the employment situation, low wages growth remains a sticking point.

Lonsec Market Commentary – November 2017

(Lonsec November 2017, Issue Date: 11-12-2017)

Lonsec Market Commentary – October 2017

Lonsec Market Commentary – October 2017 

The Australian market followed the world higher in October, after a disappointing run of negative and flat returns.

At its November meeting the RBA left the cash rate on hold at 1.50%, noting that monetary policy in other advanced economies is becoming less accommodative.

The ASX 200 Accumulation Index returned 4.01%, led by the Information Technology (+8.75%) and Energy (+6.50%) sectors.

Santos boosted Energy sector gains, beating expectations on production, revenue and costs, driven in large part by its Gladstone LNG operations. But it was Blackmores (+35.36%) that topped the leaderboard in October, posting a 28% rise in direct China sales, with the Chinese government having affirmed its commitment to the pilot of cross border e-commerce.

Lonsec Market Commentary – October 2017

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

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 – August 2016 Western Australia, business services Western Australia,financial business Western Australia, market finance planning Western Australia, financial goals Western Australia, financial objectives Western Australia, retirement saving Western Australia

Lonsec Market Commentary – August 2016, business services,financial business, market finance planning, financial goals, financial objectives, retirement saving