Monthly Market Snapshot – July 2017

In July, Australian equities remained relatively unchanged and flat. International equity market performance was positive, and this was led by China and US. Rising global bond yields suggest that central banks are edging away from accommodative monetary conditions. However, the lack of significant inflation pressures suggest a gradual approach to tightening.

Various leading indicators continue to suggest stronger growth in the US. US inflation edged marginally higher, but is still undershooting the Federal Reserve’s (Fed) targets which has led the Fed to be cautious about raising rates again this year. Expectations for fiscal stimulus which appears to be waning, continues to weigh on the US economic outlook, particularly with the Congressional Republicans’ struggle with tax reforms following the collapse of the healthcare bill in the Senate in early July.

Recovery in the Eurozone continues to come through positive momentum in economic sentiment. There was a robust 0.6% increase in GDP over the first quarter. However, headline inflation continues to remain well below its 2.0% target, reflecting that strong growth has yet to feed through to consumer prices. The European Central Bank (ECB) has kept rates on hold but is expected to announce its plans in September to gradually wind-down its bond-buying program over the next year. This has fuelled tapering speculations which triggered a sell-off in the bond markets in recent months.

The UK economy showed the lowest annual GDP growth rate of 1.7%, easing from 2.0% in the previous quarter. The Bank of England (BoE) has left its rates unchanged in order to constrain demand for consumer spending and reduce the budget deficit. UK inflation also fell for the first time in nine months.

GDP growth in the Chinese economy has improved slightly from 6.8% y/y to 6.9% y/y exceeding the 2017 growth target of 6.5%. This is largely driven by increased spending on infrastructure and property constructions. The high level of debt still presents a medium-term risk in its economy, and the government continues to put more emphasis on implementing economic reforms along with its shift towards tightening which appears to have filtered through to the property market, which has recently corrected.

Domestically, the Reserve Bank of Australia (RBA) has left the cash rate unchanged at 1.5% on the back of improving global conditions and stronger growth in China. The RBA is concerned that the recent appreciation of the AUD could dampen economic growth and inflation, which decreased in June quarter. There continues to be a divergence between business and consumer sentiment which casts concerns over the near term outlook. Improving business conditions and capacity utilisation have encouraged rising corporate profits, particularly in the mining sector. However, wage growth continues to be muted despite stronger employment growth and high levels of debt suggest that the recent boost from higher commodity prices is not being passed through to the household sector.

AUSTRALIAN EQUITIES

Australian equities were flat again in July, while the Resources sector rose by 4.9%.

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

 

INTERNATIONAL EQUITIES ($A)

MSCI Emerging Markets led the international equities sector with an increase by 1.8% during July followed by hedged MSCI World Index which rose by 1.5%. The unhedged MSCI World index fell by 1.7%, as the Australian dollar strengthened over the month.

 

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

 

INTERNATIONAL EQUITIES (LOCAL CURRENCIES)

International equity markets’ performance was led by China and US. Overall, major overseas equity markets gained over the month, with the exception of Japan which declined by 0.5%.

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

 

FIXED INCOME

Both Australian and global bonds rose by 0.2% and 0.4%, respectively.

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

 

AUSTRALIAN DOLLAR AGAINST MAJOR CURRENCIES

The Australian dollar (AUD) appreciated against all major foreign currencies in July, particularly against the USD where it increased by 4.1%.

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

 

PROPERTY

In July, Australian listed property declined by 0.2%, while hedged Global listed property increased by 0.9%.

Source: Frontier Advisors; Monthly Market Snapshot (July 2017)

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” (July 2017). 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.

More like this

Monthly Market Snapshot – September 2017

Continue reading

Monthly Market Snapshot – August 2017

Continue reading

Monthly Market Snapshot – June 2017

Continue reading

Monthly Market Snapshot – May 2017

Continue reading

Monthly Market Snapshot – April 2017

Continue reading

Monthly Market Snapshot – March 2017

Continue reading

Monthly Market Snapshot – February 2017

Continue reading

Monthly Market Snapshot – January 2017

January's market snapshot update with a Trump domination in the media. Market wise, January was relatively subdude. Continue reading

Monthly Market Snapshot – December 2016

A detailed look back at the market for December 2016. Key discussions around the Aussie dollar, Asia, Europe and the US Continue reading

Monthly Market Snapshot – November 2016

A detailed look back at the market for November 2016. Key discussions around the Aussie dollar, Asia, Europe and the US Continue reading