Investment update for September 2019

Slow global economic growth dominates

Following the volatility in August, investment markets were more stable in September. Equity markets produced positive growth and continued the strong returns of this year, while trade tensions remained and further slowed global economic growth.

Continued low inflation prompted easing monetary policy globally in September. The US Federal Reserve lowered interest rates for the second time this year. The European Central Bank decreased its interest rate and announced it will resume quantitative easing. The Reserve Bank of Australia (RBA) cut interest rates to a new historic low in September, and foreshadowed an extended period of low interest rates to pursue its inflation target and full employment.

Global oil supply was affected by an attack on a refinery in Saudi Arabia, and the price spiked at the time. However, the impact was brief and the oil price actually fell over the month.

The US manufacturing sector weakened further, while poor manufacturing data in Europe raised fears of Italian and German recessions. Japanese equities were particularly strong, benefiting from an increase in orders driven before a consumption tax rate increase in October. In Australia, resources, industrials and small caps all produced positive returns.

The Australian dollar gained against most major currencies in September. The exception was the volatile British Pound (GBP), which rides the uncertain approach to the Brexit deadline on 31 October.

The Australian 10-year government bond yield returned to 1.0% in September, as bond yields rose across the globe. This contributed to negative returns from bond markets, as well as both Australian listed property and infrastructure. Global listed property and infrastructure had positive returns for the month, and bonds still produced strong returns over the last twelve months.

Please view our full investment commentary brought to you by our advisers – Frontier – for a more in depth analysis of market conditions this month.

Read our monthly market snapshot.

We trust you find this information useful in understanding how your AvSuper investment is being influenced and welcome your feedback on how we can improve the information we provide to you.