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December Market Wrap

December Market Wrap

Geopolitical events dominate

  • Global shares failed to rebound in November as geopolitical events dominated markets. In unhedged terms, global shares fell -1.8 % but they were up 1.2% in hedged terms due to a stronger Australian dollar.
  • The outcome of the US mid-term elections was widely anticipated with the Democrats taking over the House of Representatives and Republications consolidating their position in the Senate. As a result, the likelihood of the Republicans to extend fiscal stimulus has reduced and markets expect US growth to slow through the course of 2019.
  • Europe had its own political issues. While the Brexit deal was endorsed by EU leaders, markets were unsure whether the UK Parliament will approve it. Also, the Italian budget laws were rejected by the EU as no significant changes were made to the original proposal.
  • Oil prices plunged in November as swelling US inventories more than offset demand.
  • Emerging countries continued to face challenges though the meeting at the G20 between President Trump and President Xi showed some willingness to attempt to ease trade tension.
  • The US 10-year Treasury yield fell back to 3.01% as markets became more concerned about the outlook for global growth and as the oil price fell.
  • The Australian dollar rallied by 3.3% in the month as the minutes from the latest US Fed meeting showed a more dovish shift that pushed the US dollar lower.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares -2.2 -1.0 5.8
Global Shares (hedged) 1.2 1.9 9.8
Global Shares (unhedged) -1.8 4.2 11.7
Global Emerging Markets (unhedged) 1.1 -5.5 6.6
Global Small Companies (unhedged) -2.4 0.2 11.4
Global Listed Property 3.3 3.7 9.6
Cash 0.2 1.9 2.2
Australian Fixed Income 0.2 2.5 4.5
International Fixed Income 0.5 0.5 4.4
Source: JP Morgan & ANZ Wealth, 30 November 2018.
Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Markets Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg AusBond Composite 0+ Yr Index, International Fixed Income – Barclays Global Aggregate Bond Index (hedged).
Please note: Past performance is not indicative of future performance.

Currency

Exchange rates At close on 30/11 % change 1 month % change 12 months
AUD/USD 0.73 3.3 -3.4
AUD/euro 0.65 3.3 1.6
AUD/yen 83.0 3.9 -2.6
Trade weighted index 63.3 2.3 -0.5
Source: Bloomberg & ANZ Wealth, 30 November 2018. All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance.

 

Disclaimer: This information is current as at 30 November 2018 but is subject to change.
This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed.

The information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account does not take into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522

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