ANZ Smart Choice Super Investor Update : Member Update Autumn 2015
666 Investment insights Policy makers took action to avoid a more worrying slowdown in growth. In February, the People’s Bank of China (PBoC) reduced the percentage of reserves banks are required to hold for lending, while in March it cut interest rates - this followed a cut to rates in late 2014. US sets up for rate rises Continued falls in the unemployment figures shows that the US economic recovery is more advanced than elsewhere and growth is still positive despite the rising US dollar (USD) slowing down growth somewhat. While other developed economies have been cutting interest rates or implementing other stimulus measures, as outlined above, the talk in the US is about the expectation of rate rises in 2015. Changes to the Fed’s interest rate outlook dominated headlines late in the quarter. The Fed’s median projection for the path of interest rates was reduced. If realised, this would imply one of the slowest patterns of interest rate increases undertaken by the Fed over at least the last 50 years. This should ensure that policy still supports the US share market to continue to move higher, albeit at a perhaps slower pace than seen over the past couple of years. Oil prices settle Lower oil prices have generally supported growth, keeping energy and transport costs low for businesses and consumers. On the negative side, the sharp falls in 2014 set off concerns about defaults in the energy sector which would negatively impact financial markets. This quarter prices stabilised, reducing these concerns. Asset class performance Australian shares The Australian share market (ASX 300 Index) rose 10.3% in the quarter. The strong rise occurred despite resource stocks declining further as commodity prices, particularly iron ore, continued to fall. A falling Australian dollar (AUD) and lower interest rates saw the rest of the market post very strong gains as both of these factors boost company earnings. Global shares Global shares rose 5.2% in hedged Australian dollar (AUD) terms over the quarter and 9.6% in unhedged AUD terms, following further declines in the AUD. The US (S&P 500 Index) gained only 0.4% as analysts reassessed US corporate earnings in light of the strengthening USD. By contrast, weaker currencies combined with signs of strengthening in their respective economies saw further solid gains in the euro zone and Japanese share markets. European stocks spiked significantly following the boost in confidence provided by the ECB’s extended stimulus measures and delivered 17.9% in the quarter for the Euro Stoxx 50. The German DAX share market rose 22% in the quarter. The Nikkei delivered a robust 10.1% return in the quarter. Emerging Market shares performed broadly in line with their developed counterparts with a strong 9.5% return (in AUD terms). Drivers of performance included the Chinese action to avoid the growth slowdown which saw a 8.1% return in the MSCI China Index.
Member Update Summer 2015
Member Update Winter 2015