Quarterly Update March 2010
10 April 2010In the first quarter of 2010, the S&P/ASX200 struggled to match the returns seen in the initial phase of the current rally, continuing to trade in a 10% range. The index just finished the quarter in positive territory, closing at the top of its range at 4875. We continue to maintain an upside target of 5400 at December 2010, underpinned by improving company results.
The market was driven by the key macro themes of stimulus withdrawal and sovereign risk. These themes also had an impact on the S&P Asia 50 which finished the quarter slightly down.
The Instreet ARC strategy, which does not rely on market direction, continued to rally in the first quarter and finished up over 2%.
Australia's performance vs the world
In local currency terms, the S&P/ASX 200 posted +0.1% (+2.3% in USD) for the quarter, underperforming the S&P 500 (+4.9%) and the World MSCI ex Australia Index (+2.7%). The S&P Asia 50 returned -0.2%, underperforming the Australian market.
Global equity markets continue to rally
Global equity markets finished the quarter “flat to up”, a good performance considering the bad macro news they had to contend with in this period and despite the fact both the US and Australian markets enjoyed positive reporting seasons. This quarter has seen the worst quarterly returns since the current rally began in March 2009.
Economic Performance
The AUD finished the quarter at USD 91.72c, up 2.2% over the quarter but the main gains were against the Euro. The 10-year bond rate continued to rally finishing at 5.78%, up from 5.64% at the start of the quarter.
The USD continued to be volatile during the first quarter. The USD appreciated against most major currencies (not AUD) due to the deteriorating macro environment that found investors looking for the relative safety of the greenback.
Commodities, oil and gold strong
While the CRB Index fell -3.5% for the quarter, gold and oil recorded gains well above that. Gold closed at US$1113.30 per oz, while oil closed at US$83.80 a barrel. It is this rise in the oil price that poses a substantial threat to the global recovery.
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 are not intended to constitute advice.
Whilst due care has been taken in relation to the accuracy of the information contained in this update, no responsibility or liability is accepted by Instreet or any third party who has contributed to this article for any of the information contained herein or for any action taken thereupon.
Past performance: Past performance is not a reliable indicator of future performance
