Monthly Market Snapshot – February 2018

Global PMI (Purchasing Managers’ Index) surveys continue to expand reaching 54.8 in February. The rate of expansion in global economic output accelerated to a three and half year high in February, as stronger growth in the service sector offset the weakness in manufacturing. Business conditions continue to improve across the business, financial services and fixed investment sectors. New orders, new exports and employment continue to sustain their upward momentum.

The US economy added 313,000 jobs in February as the unemployment rate steadied at 4.1%. Average hourly earnings were weaker than expected, rising 2.6% annually to February. Momentum in the labour market continues to sustain its strength, serving as a boost to the outlook. Q4 US GDP growth came out weaker than expected at 2.5% while Core PCE strengthened to 1.9%. This suggests continued strength within the US economy against a backdrop of accommodative monetary policy and ongoing tightening by the US Federal Reserve. Trade restriction policies have been discussed by President Trump with the initial impact felt by Canada, Mexico and China. US equities were down 3.7% in the recent month due to the correction in early February, while 10-year bond yields inched higher, closing at 2.9% versus 2.37% at the end of October 2017.

Within the Eurozone, macroeconomic data continues to support a positive outlook. Eurozone composite PMI was marginally weaker in February, at 57.1, with a weakness in momentum in services PMI. Backlogs of work subsequently continue to rise, while the level of new business in the Euro region continues to expand, suggesting that firms lack sufficient capacity to meet demand. However, the acceleration of new and outstanding business both eased to six month lows. Inflationary pressure continues to sustain its strength but producer price inflation softened marginally since November last year. Unemployment contracted to 8.6%, the lowest since the Euro area crisis in 2011. While within the UK, negotiations for Brexit continues.

Within China, the Chinese government has announced its target growth rate of 6.5% for this year and made changes to the existing government constitution. President Xi will be allowed to remain in power past the stipulated term as set out previously.

Within equity markets, MSCI emerging markets continue to outperform MSCI World with strong growth coming from Brazil and Taiwan.

Within the domestic market, ASX300 grew by 0.3% in the month to date, while the 10-year bond yields rose to 2.8%. The RBA kept the cash rate unchanged at 1.5%. While housing finance fell by 1.1% on an annual basis in February, building approvals increased by 17.4%. Business conditions and consumer confidence continue to improve, suggesting a brighter outlook as compared to the first half of 2017.

AUSTRALIAN EQUITIES

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

INTERNATIONAL EQUITIES ($A)

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

INTERNATIONAL EQUITIES (LOCAL CURRENCIES)

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

FIXED INCOME

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

AUSTRALIAN DOLLAR AGAINST MAJOR CURRENCIES

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

REAL ASSETS (PROPERTY/INFRASTRUCTURE)

Source: Frontier Advisors Monthly Market Snapshot (February 2018) Thomson Reuters Datastream

Download this month’s snapshot

CONTACT US

Our website is your one-stop shop for information about NGS Super. You can also contact us via the contact us page at www.ngssuper.com.au or call our Customer Service Team on 1300 133 177 between 8.00am and 8.00pm (AEST/AEDT), Monday to Friday.

NGS FINANCIAL PLANNING SERVICE

NGS Super members are also entitled to a free initial consultation for general advice relating to your personal circumstances through our financial planning service. We also offer low fixed fees for financial plans – no hidden costs or commissions.

For further information, visit our Financial Advice page or to make an appointment, please call 1300 133 177.

IMPORTANT INFORMATION

 
The information in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances and consider seeking independent advice from a licensed or appropriately authorised financial advisor. Past performance is not a reliable indicator of future performance.
 
The information contained in this document has been sourced from Frontier Advisors Pty Ltd, AFSL 241266; “Monthly Market Snapshot” (February 2018). The information contained in “Monthly Market Snapshot” is intended as general commentary and should not be regarded as financial, legal or other advice. Should you require specific advice on the topics or areas discussed please contact NGS Super directly or an appropriate advisor.
 
Information provided in this blog may have changed since the time of writing. You should confirm the information is current before relying on it.

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