Quarterly Update September 2009
02 October 2009Long term we remain constructive on Australian equities as the cyclical growth story continues into 2011 and 2012. We believe that any pull-back is a buying opportunity. Markets rarely trade sideways, but we would expect any fluctuations to revert to similar levels, in the next quarter, to where we are at now – i.e., a flat outcome in the next quarter.
Australia's performance vs the world
In local currency, the All Ordinaries posted +20% in ( 31.4% in USD, enhanced by a depreciating USD dollar) for the quarter outperforming the US S&P 500 (+15%) and the World MSCI ex Australia Index (+16.4%). The Australian market even outperformed in USD terms the regional MSCI ex Japan Index (+21.6%) i.e. Asia
Global equity markets continue to rally
Increasing unemployment in the US, extended valuation multiples and mixed economic news couldn’t derail the equity market recovery during the quarter. The Dow Jones Industrial recorded three positive monthly returns while the Chinese market, which had a negative result in August, recovered in September to return 1.7% over the quarter.
Economic performance
The AUD finished the month at US88.28c, up 9.5% over the quarter. The 10-year bond rate finished at 5.36%, down from 5.52% at the start of the quarter. The 90-day Bank Bill rate finished at 3.37%.
For the major developed countries government bond yields contracted during the quarter. This is somewhat at odds with the continuing rally in equities and possibly suggests there is ample cash available for all asset classes.
Except for the GBP, the USD depreciated against all major currencies during the quarter. Interestingly New Zealand delivered positive GDP growth for 2Q09 and this helped the NZD record the strongest currency appreciation during the quarter. In Japan, the market is expecting the newly elected Democratic Party to tolerate a stronger JPY than its predecessor. Thiswhich assisted the JPY in being the third strongest currency, after the AUD among the developed countries.
Commodities had mixed results
Gold managed to finish the quarter above the US$1,000/oz mark with an 8.8% return over the month. Gold has rallied 15% over the past 12 months. Oil finished the month flat following a volatile period trading.
For more information on how the Instreet products have performed see Pricing & Performance, under Products/Exisiting Investors.
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.
