Monthly Market Snapshot – November 2017

Global PMI (Purchasing Managers’ Index) surveys continue to improve reaching 54 in November, the highest reading since March 2011. Business Conditions continue to improve across the consumer and fixed investment sectors. New orders, new exports and employment continue to sustain their upward momentum. On average, growth in output remains higher in developed countries compared to emerging markets.

Within equity markets, MSCI emerging markets continue to outperform MSCI World and the ASX200. Technology remains as the fastest growing sector in 2017.

The US economy added 228,000 jobs in November while the unemployment rate steadied at 4.1%. The manufacturing sector added the most jobs in 15 years, accounting for 17.5% of the monthly jobs added. Average hourly earnings rose by 2.5% annually in November. Momentum in the labour market continues to sustain its strength, serving as a boost to the outlook. The US economy beat market expectations and expanded 3.3% in the third quarter of 2017. Upward revisions were made for growth in non-residential fixed investments and government spending. US equities gained 3.1% in November while 10-year bond yields closed higher at 2.4% versus 2.37% at the end of October 2017.

Within the Eurozone, macroeconomic data continues to support a positive outlook. Eurozone composite PMI inched higher to 57.5 against a backdrop of broad-based growth across major Eurozone countries. Business activity rose to one of the greatest extents in the last six years, while manufacturing production rose at its quickest pace in almost seven years in November. Inflation continues to be weak but PMI input price gauges suggest the continued strength in momentum would see inflationary pressures pick up in 2018. Unemployment contracted to 8.8%, the lowest since the Euro area crisis. The largest decrease in unemployment was registered in Cyprus and Greece, providing a support for the positive outlook in the Euro area labour market.

Within the UK, negotiations for Brexit continues. Fears that Brexit could derail the domestic economy remain a major concern in the near term.

In China, credit growth rose sharper than expected even as authorities step up efforts to reduce risks within the financial system. Combined trust loans, entrusted loans and undiscounted banker’s acceptance (common forms of shadow banking) rose by 66 billion yuan, suggesting growth in shadow banking activities continues to remain strong.

Within the domestic market, ASX200 grew by 12.3% on an annual basis while the 10-year bond yields declined further by 0.17% to 2.5%. The RBA kept the cash rate unchanged at 1.5%. The labour market has improved considerably, with the unemployment rate declining further to 5.4%, while full-time employment continues to strengthen as part-time employment declined. Wage inflation and core inflation continue to remain weak which suggest the RBA would be likely to keep the cash rate lower for longer. Business conditions and consumer confidence continue to improve, suggesting a brighter outlook as compared to January 2017.

AUSTRALIAN EQUITIES

The S&P/ASX 300 Accum. Index closed the month up 1.7% with the strongest growth from Australian small caps at 3.9% over the month.

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

INTERNATIONAL EQUITIES ($A)

The $A hedged MSCI World Index ex-Australia gained 1.7% in November, while the unhedged index gained 3.2%, as the Australian dollar weakened over the month. Emerging market equities continue to lead developed market equities, gaining 13.1% for the financial year to date, although they lagged developed markets equities for the month.

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

INTERNATIONAL EQUITIES (LOCAL CURRENCIES)

In November, equity markets in Japan and the US gained 3.2% and 2.8% respectively. All major markets posted positive returns for the financial year to date, albeit very small in the case of UK equities.

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

FIXED INCOME

In November, Australian bonds and global bonds returned 0.9% and 0.2%, respectively.

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

AUSTRALIAN DOLLAR AGAINST MAJOR CURRENCIES

The Australian dollar (AUD) depreciated against all major currencies, in particular against the USD and JPY by 1.2% and 2.2% respectively.

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

PROPERTY

In November, Australian-listed property and hedged global-listed property gained 5.3% and 2.4% respectively.

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

Download this month’s snapshot

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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.

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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” (November 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.

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