Quarterly Update December 2009
08 January 2010The S&P/ASX 200 closed meaningfully above of 4800 for the end of year 2009, reaching 4870 on 31 December as investors added more risk to their portfolios. We forecast further returns of over 10% for the Australian market with an upside target of 5400 for December 2010, based on continual improvement in company earnings for 2010.
Earnings will now be the central theme for near-term performance of global equities as valuation measures are at or above long-term averages.
Australia's performance vs the world
In local currency, the S&P/ASX 200 posted +2.7% (4.4% in USD) for the quarter underperforming the S&P 500 (+5.5%) and the World MSCI ex Australia Index (+3.7%). The S&P Asia 50 returned +4.9% outperforming the Australian market.
Global equity markets continue to rally
Despite struggling to deliver positive returns during the first part of the quarter, the MSCI
World Index finished the quarter in the black. With investors adding more risk to their portfolios the BRIC indices were the clear beneficiaries.
Economic Performance
The AUD finished the quarter at USD 89.77c, up 1.7% over the quarter. The 10-year bond rate finished at 5.64%, up from 5.36% at the start of the quarter.
The USD had a mixed result during the quarter. In the first part of the quarter the USD depreciated against most of the major currencies. The AUD during this period moved higher than 92c. However, signs of an improving US economy caused investors to worry about the ultra-low monetary policy, which helped the USD appreciate at the quarter end.
With investors gaining confidence in the economic recovery, the long end of the interest rate yield curve, the 10-year bond rate, increased during the quarter.
Commodities, metals appreciate while soft commodities fall
While the CRB Index gained 9.3% for the quarter, precious metals and energy commodities
recorded gains well above that. Despite reaching levels of US$1,200 per oz during the quarter, gold lost its value towards the end of the quarter due to the appreciating USD. Oil prices reached US$79 and recorded a 12% gain for the quarter.
Important Information
General advice warning: The information contained in this document (email) is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. Advisers must form their own views on whether this information is appropriate after considering their clients’ objectives, financial situation and needs.
Any statements contained here are general only and do not take into account your needs, objectives, financial circumstances, or investment preferences and are not intended to constitute advice.
No responsibility or liability is accepted by Instreet or any third party who has contributed to this presentation for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.
Past performance: Past performance is not a reliable indicator of future performance.
