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November Market Wrap

November Market Wrap

Market volatility returns in October

  • Even though economic fundamentals remained strong, market volatility returned in October with share markets tumbling worldwide. Global shares returned -6.9% and -5.4% in hedged and unhedged terms respectively.
  • The S&P 500 fell almost 7%, leaving the calendar to year gain to only 1.4%. However, the US economy continued to steam ahead with unemployment falling to its lowest level in almost 50 years, which supported consumer confidence. The preliminary 3Q GDP also came in strong, at 3.5% annualised.
  • Things weren’t as rosy in Europe with purchasing managers’ indices continuing to disappoint. Trade tensions have also appeared to affect activities within the region and political concerns in Europe continued to weigh on markets.
  • Concerns around a slowdown in China lingered as trade tensions with the US increased. China’s central bank cut its reserve requirement ratio again in October in an attempt to support bank credit growth.
  • Locally, the latest fall in unemployment rate to 5% was seen positively as it suggests wages may grow more quickly.
  • Both local and international fixed income were flat, returning 0.5% and -0.2% respectively.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares -6.2 2.9 6.0
Global Shares (hedged) -6.9 2.4 10.1
Global Shares (unhedged) -5.4 9.6 13.4
Global Emerging Markets (unhedged) -6.8 -5.4 6.8
Global Small Companies (unhedged) -8.0 5.9 13.2
Global Listed Property -2.6 3.0 8.1
Cash 0.2 1.9 2.2
Australian Fixed Income 0.5 3.1 4.4
International Fixed Income -0.2 0.2 4.4
Source: JP Morgan & ANZ Wealth, 31 October 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 31/10 % change 1 month % change 12 months
AUD/USD 0.71 -2.1 -7.6
AUD/euro 0.63 0.5 -4.9
AUD/yen 79.9 -2.7 -8.2
Trade weighted index 61.9 -0.5 -4.6
Source: Bloomberg & ANZ Wealth, 31 October 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 31 October 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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