Investment update for March 2018
In Australia, the Reserve Bank of Australia (RBA) maintained its unchanged monetary policy stance at an eighteenth meeting (for a record 20 months on hold). On the one hand the global economy is strong, Australian business conditions remain robust, employment growth is strong and the RBA continues to expect growth and inflation. While the central bank also maintains a vigilant watch on financial volatility, escalating trade tensions and higher bank funding costs, it does not appear to be overly concerned by these issues. On the other hand, there is uncertainty around both consumer spending and wages growth, and inflation remains low. Notably, the Sydney and Melbourne property markets have cooled following measures taken by the Australian Prudential Regulation Authority to tighten lending standards.
The US Federal Reserve announced a rate increase on 21 March of 0.25% in its key lending rate, accompanied by a very upbeat statement about the economy in general. Key officials have raised their expectations around US growth and inflation, whilst lowering expectations of unemployment.
A trade dispute escalated during the month when the US Administration released a memorandum outlining what it termed “China’s economic aggression” and announced plans to implement a tariff on selected Chinese goods. There are further plans to increase these tariffs to several other nations when the US Treasury publishes its foreign exchange report in the second week of April.
Other markets remained neutral during the month with Japan’s estimated inflation tracking towards its 2% target for 2019. Even though industrial production has fallen slightly, Japanese manufacturing PMI trends remain supportive of the economy. Italy is in a state of flux after its general election had no clear winner. This has made Germany a rock of stability as it recently stabilised its coalition government. Consumer sentiment in Europe remains elevated and businesses are being more conservative.
Please view our full investment commentary brought to from our advisors – Frontier – for a more in depth analysis of market conditions this month.
We trust you find this information useful in understanding how your AvSuper investment is performing and welcome your feedback on how we can improve the information we provide to you.