Investment update for February 2012
Positive data buoying market sentiment
Australian equities had a good month. With positive sentiment and strong Energy prices drove markets, it was not surprising that the Energy sector performed well. Other cyclical sectors of Industrials, Consumer Discretionary, Health Care and Information Technology also performed strongly, while the defensive sectors of Consumer Staples and Utilities were comparatively weaker. Materials were weak, largely reversing gains from the prior month. Small companies outperformed large caps due to small Industrials stocks. Unlisted property posted a positive return for February with returns largely reflecting income and modest capital appreciation.
he Reserve Bank left rates on hold at 4.25% in February. The yield on 10-year Government bonds for Australia, Euro area, UK and US government bonds increased, reflecting improving investor sentiment towards risk assets, but remain well below long term averages.
Overseas markets continued on from the strong start to the year, with most major regions reporting positive economic data or initiatives to stimulate growth. Positive US housing and unemployment data continues to support the US recovery story, driving up US stocks. Falls in Chinese exports and imports, for the first time in 2 years, were countered with a 50bp cut to the Chinese banking reserve requirement ratio. Late in the month, the European Central Bank (ECB) announced €529 billion in three year low-interest loans to 800 banks in the second round of a credit injection. This generally revived optimism in the European region, and in particular, the financial sector.
Overall, February was a good month for markets. However, tensions between and Iran and the West triggered a spike in oil prices (but pushed up prices for Energy stocks).
Investment markets are expected to remain volatile for the time being as market sentiment proves to be closely aligned to political and policy announcements.
Broad stock market performance – February 2012
|Performance (income and capital gain or loss) %|
|Australian Shares (S&P/ASX 300 Accumulation)||2.0|
|International Shares (MSCI AC World ex-Aust) hedged||3.3|
|Global Bonds (Barclays Global Aggregate (Hedged))||0.7|
|Cash (UBS Bank Bills)||0.3|
|Appreciation of $A against $US||1.7|
|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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