Monthly Market Snapshot – March 2017

In March, global bond markets were flat, while Australian bonds produced a positive return. Major equity markets’ performance was mixed in March, with Australian and European equities up relatively strongly, while US and UK equities were relatively flat, and Japanese equities were down moderately.

The US Federal Reserve raised its policy rate by 0.25% to a range of 0.75% to 1%. The third rate hike since the 2008 crisis was supported by robust economic data including strong job market figures (low unemployment rate), increasing inflation, and continued recovery in business and consumer confidence since the second half of 2016. However, US 10 year government bond yields did not move in response as the market has already factored in three rate hikes by the end of 2018. The US equity market also did not move, as the market is taking a wait and see posture on what the Trump Administration will implement, as it failed to repeal Obamacare.

Domestically, equities continued increasing with improving earnings expectations largely driven by strong demand for commodities since late last year. However, commodity prices decreased during March into April causing the Australian dollar to marginally depreciate against major foreign currencies. With growing concerns over low inflation and disappointing wages growth on one hand, while on the other hand concerns of increasing housing prices, the RBA has chosen to keep the current cash rate at 1.5%. Instead, the financial regulator, APRA, imposed new policies on residential mortgage lending practices, for instance, limiting new interest-only loans as a proportion of total new lending by banks.

In Europe, business confidence is picking up to its highest level since 2011, and consumer confidence reached near its pre-crisis level, both supporting the European central bank’s stance that the European economy is gradually shifting to a reflationary phase. Political concerns reduced slightly as in the Netherlands election the right-wing party was not supported as had been feared. The pro- EU candidate, Emmanuel Macron, is currently leading the polls in the French Presidential campaign that will be held in April and May.

Japan continues to produce strong economic survey data since late 2016, including strong labour market data with a falling unemployment rate, increasing business confidence, and continued positive Manufacturing and Services PMI (Purchasing Managers Index) survey results. Japanese Yen has appreciated since January, as the US dollar has weakened while US bond yields moved sideways.

Trump’s aggressive rhetoric and positioning towards North Korea and its continued weapons testing program has increased in the region.

However, although still highly uncertain, the Trump Administration’s position on China appears to have softened and the likelihood of negative US policies towards it appear to have lessened. Domestically in China, stabilising business conditions indicated by business confidence and PMI indices, suggest continued growth in the economy.

AUSTRALIAN EQUITIES

Australian equities rose in March, closing the month up by 3.3%, while the Resources sector was relatively flat with a 0.5% increase.

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

 

INTERNATIONAL EQUITIES ($A)

The hedged MSCI World Index rose 1.0% in March, while the unhedged index rose by 1.8%, as the Australian dollar depreciated over the month. Emerging market equities rose by 3.3% in Australian dollar terms.

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

 

INTERNATIONAL EQUITIES (LOCAL CURRENCIES)

Major equity markets’ performance was mixed across the world in March, with European equities were up by 5.5%, while US, UK and Chinese equities relatively flat, and Japanese equities were down by 1.1%.

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

 

FIXED INCOME

Australian bonds increased in March producing a 0.4% return. Global bonds had no gain during the month.

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

 

AUSTRALIAN DOLLAR AGAINST MAJOR CURRENCIES

The dollar (AUD) depreciated against all major foreign currencies in March. For the financial year to date, the AUD has recorded gains against all major currencies, although it is a relatively minor increase against the USD.

 

 

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

 

PROPERTY

Australian listed property increased by 0.7% in March, while global listed property had a loss of 1.5%.

Source: Frontier Advisors; Monthly Market Snapshot (March 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” (March 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 – August 2017

Continue reading

Monthly Market Snapshot – July 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 – 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

Monthly Market Snapshot – October 2016

Continue reading