Market Update - April 2016

Market Commentary

Australian, US and European equity markets performed well again in April, compounding the strong performance witnessed in March, while Asian markets generally retraced over the month.
The monthly, quarterly and financial year returns of the major markets to 30 April 2016 are summarised below.


Market Performance - 30 April 2016

Month

Quarter

FYTD

Australian Equities

3.3%

6.4%

0.3%

Australian Property (Unlisted)*

0.5%

2.7%

10.6%

Australian Property (Listed)

2.8%

8.3%

17.2%

Overseas Equities (Hedged into AUD)

1.0%

4.9%

-1.7%

Overseas Equities (Unhedged into AUD)

2.4%

-0.2%

-1.1%

Emerging Markets (Unhedged into AUD)

1.4%

5.4%

-11.3%

Australian Bonds

0.3%

1.1%

4.3%

Overseas Bonds (Hedged into AUD)

0.3%

2.3%

6.6%

Cash

0.2%

0.6%

1.9%

Australian Dollar vs. US Dollar

-0.8%

7.9%

-0.7%

 Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays
*Estimate at 10/05/2016

The Australian share market as measured by the S&P/ASX300 Accumulation Index rose 3.3% in April with the rise in commodity prices a key driver.  Iron ore prices have risen over 50% during the 2016 calendar year, while the oil price also peaked in April, with the price of WTI Crude reaching a yearly high of $US42.2. Furthermore, positive sentiment also drove markets higher with a strong result in the NAB business confidence survey and an unemployment rate of 5.7% versus a market expectation of 5.9%.

Small Cap stocks returned 3.0% for the month, underperforming the broader market and Large Caps stocks (3.5%).  At the sector level, the S&P/ASX 300 Materials Accumulation Index rose 15.3% for the month while Consumer Discretionary (down 1.7%) was the worst performing sector.

The MSCI World ex-Australia Index (hedged into AUD) rose by 1.0% over the month.  The Australian Dollar depreciated in April, which resulted in a return for overseas equities of 2.4% (in AUD) on an unhedged basis.  Performance was positive across most developed markets, with Norway (5.0%) and Spain (4.7%) outperforming while Ireland (-0.9%) and Finland (-0.7%) were the worst performers.  The MSCI Emerging Markets Index (1.4%) outperformed developed markets.

In the US, equity market finished the month in positive territory, with the S&P500 ending the month 0.3% higher, with the Energy sector benefiting from the continued recovery in oil prices.  The US Federal Open Market Committee left interest rates on hold in April but signaled confidence in the US economic outlook, increasing the probability of an interest rate rise in June.

In Europe, the MSCI All Country Europe Index rose 3.5% as investors reacted positively to a fall in euro area unemployment and the rebound in the price of oil.  European indices were choppy in the latter half of the month as company reporting season commenced.  
Asian equities were volatile again in April, but trended downward, with both Chinese and Japanese stock markets closing lower for the month. 

The Shanghai Composite Index bounced around during the month, reacting to numerous domestic and international economic data releases, but finally finished down reflecting investor concerns over China’s future economic prospects.  The Nikkei Index fell slightly in April, largely driven by a reversal in sentiment as the Bank of Japan failed to announce further stimulus.
Australian and global bonds provided pleasing returns over all periods shown above.