Investment update for April 2012
Mixed economic data still drives market sentiment
Economic and political uncertainty made for a weak month for global share markets in April. A generally positive corporate reporting season in the US was overshadowed by more subdued economic data from China, Europe, Japan, UK and the US. The US Federal Reserve indicated central bank rates will remain low until at least 2014, and expectations are that China will loosen monetary policy in an effort to stimulate economic growth.
Australian equities reached positive territory (+1.3%) driven by lower than expected inflation figures and market expectations that China would loosen monetary policy. Market appetite for yield was high, driving investors towards higher yielding stocks within Financials, Telecoms and Listed Property Trusts, causing those sectors to outperform the broader market through April. In a reflection of the ‘risk off’ sentiment driving markets, Energy, Materials, Industrials, IT and small caps underperformed the broader market.
Over the month, however, global equities lost ground on a hedged basis (-1.2%), and with the $A marginally strengthening against the $US, unhedged returns (in $A) were slightly weaker (-1.7%). Unhedged returns (in $A) for all major regional indices were negative, with the notable underperforming regions being Japan, Latin America and Europe, where Spain, Italy and Greece bore the brunt of market concerns. In such an environment, it is not surprising that the defensive sectors of Consumer Staples and Telecoms were the only positive performing sectors for April. All other sectors were negative with Materials, Industrials, IT and Financials faring the worst.
Investors should expect volatility to continue for the time being as market sentiment proves to be closely aligned to political and policy announcements.
Broad stock market performance – April 2012
|Performance (income and capital gain or loss) %|
|Australian Shares (S&P/ASX 300 Accumulation)||1.3|
|International Shares (MSCI AC World ex-Aust) hedged||-1.2|
|Global Bonds (Barclays Global Aggregate (Hedged))||1.0|
|Cash (UBS Bank Bills)||0.4|
|Appreciation of $A against $US||0.5|
|Check out AvSuper’s weekly returns and quarterly performance results Please note that past performance is not always a reliable indicator of future performance.|
Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays
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