Market Update – September 2013

Market Commentary

Central bank policy was again the driver of global markets as investors responded to the US Federal Reserve’s decision to delay the tapering of their quantitative easing (QE) program. The prospect of prolonged stimulus coupled with better than expected economic data releases from Europe and China improved sentiment and led to strong performance by assets leveraged to the economic cycle. Further support for growth assets came from the political front as the governments of the United States and Russia allayed market fears of a US military strike in Syria as they worked toward a diplomatic solution to the alleged use of chemical weapons in the ongoing Syrian civil war. However, this political support faded rapidly toward the end of the month as a looming US government shutdown and potential confidence vote in Italy rocked markets.

The investment returns of the major markets for the month of, and three months to, September are summarised below.




 

Market Performance – September 2013

Performance
%

Month

3 months

Australian Shares (S&P/ASX 300 Accumulation)

2.2

10.3

International Shares (MSCI World ex-Australia) unhedged

0.0

5.9

International Shares (MSCI World ex-Australia) hedged

3.9

7.0

Unlisted Property (Mercer Unlisted Property Funds Index (Pre Tax)

0.5

1.5

Listed Property Trusts (S&P/ASX 300 Property Trusts Accumulation)

0.9

0.2

Australian Bonds (UBS Composite Index)

0.5

1.0

Global Bonds (Barclays Global Aggregate (Hedged))

1.0

1.4

Cash (UBS Bank Bills)

0.2

0.7

Appreciation of $A against $US

5.0

2.2

Global shares rose strongly over the month but the strong appreciation of the $A means that the return was flat for investments that were not currency-hedged to the $A. Finland, Greece and Spain were among the best performers, each rose by over 10% for the month.

Australian shares, as represented by the S&P/ASX300 Accumulation Index, rose by 2.2%, with mid-caps being the standout segment while top 20 stocks lagged. Within the small caps space, Industrials outperformed Resources by 10%.

Investments in bonds (or ‘fixed interest’) provided positive returns over the month. Another highlight of the month was the weakening of the $US against most major currencies, including the $A.