October 12, 2018

Market Update September 2018.

During September, the US share market hit another record high, on the back of continuing strong economic data. This strong US economic data also caused interest rates, and the US dollar to both rise in September. September also saw US President Donald Trump follow through with threats of imposing Tariffs on trading partners, mainly China, and that resulted in falls in most Asian share markets, as fears of a mounting trade war may negatively impact Asian economic growth in coming years. Australian shares rose 1.5% during the month of September, despite ongoing weakness in banking shares as the fallout from the Hayne Royal Commission into banking continued. The Banking Royal Commission interim report was released on 28 September, with many unsavoury tales of banking and insurance behaviour. The final report will be released in February 2019. This final report is expected to contain potentially punitive and severe recommendations such as fines, and other penalties to be imposed on banks and insurance companies. On the positive side, investors here in Australia have continued to buy mining and energy stocks in September, on the back of rising coal and iron ore prices. Oil and gas prices also increased to 4 year highs, which resulted in oil stocks trading to their highest levels in 4 years. The Aussie dollar continued it’s recent weakness against the US dollar, to close the month at 72.2 cents, its lowest level since February 2016. Interest rates in Australia also remained low, and unchanged at 1.5% - the same rate since August 2016 when the Reserve bank last dropped interest rates from 1.75%.

Investment performance of key markets (%)

 

  1 month 1 year 3 year 5 year
Australian Shares (ASX 300) 1.5% 14.0% 12.2% 8.2%
Global Shares (MSCI All Country – local currency) 4.7% 11.1% 13.4% 10.5%
Australian Dollar (AUD/USD) -2.1% -7.8% 1.0% -5.0%
Australian Fixed interest (Bloomberg Composite) 0.5% 3.7% 2.9% 4.3%
Cash (Bloomberg Bank Bill) 0.5% 1.9% 1.9% 2.2%