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Investments Updated 13 March 2015

Monthly Market Update

February 2015

During the month, the Reserve Bank of Australia lowered the official cash rate by 25bps to 2.25%.  The cut spurred simultaneous rallies in Australian equity and fixed interest markets and spurred on already elevated property markets.

February was a very strong month for US equities as the markets rebounded from poor January results to exceed previous highs. The S&P500 rallied 5.5% over the month to an all-time high.  The Dow Jones also climbed 5.6% to an all-time high to and the NASDAQ rose 7.1% to a level unseen since the dot-com bubble a decade and a half ago. 

European equities also had strong gains for the month with the MSCI Europe (hedged in AUD) up 6.1%.  Continental markets were mostly buoyed by expectations of the impact of the European Central Bank (ECB) Quantitative Easing (QE) ahead of implementation in March.  However, there was continuing concerns over Greece in the aftermath of the Syriza win.  The negotiations between Greece and the ECB over a re-negotiation of the bail-out conditions have been extended, with the possibility of Greece leaving the Eurozone still weighing on fixed interest markets. 

Japan also had a strong month with the Nikkei225 rallying 6.4% amid continuing Bank of Japan quantitative easing. But elsewhere in Asia, equity markets were patchy, with Hong Kong, Shanghai and Bombay all posting less convincing results.

The MSCI World ex-Australia Index (hedged into AUD) rose 6.1% over the month.  The Australian Dollar appreciated against most major developed world currencies resulting in a lower return of 5.3% (in AUD) on an unhedged basis. In the developed markets, the strongest performing share markets in local currency terms were Greece, Ireland and Austria.  The weakest performing countries/localities in local currency terms were Hong Kong and New Zealand.  Emerging markets (unhedged in AUD) (2.6%) lagged developed markets, despite Russia posting a second consecutive month of strong growth and Brazil bouncing back strongly from losses in January.  From a global sector perspective, performance was strong across the board. Materials and Consumer Discretionary led the way, while Utilities alone finished the month in the red. 

The S&P/ASX300 Index appreciated 6.9% over the month.  Performance was very strong across all segments of the market, but Large Caps (6.9%) underperformed Small Caps (8.4%).  Resources stocks were a standout as the S&P/ASX300 Resources Accumulation Index rose 11.3%.  Materials also performed strongly, with a return of 11.7%, while Telcos (-1.5%) gave back some of January’s gains and Consumer Staples was flat for the month.

Over the month, the yield on 10-year Australian, US, UK, Euro, NZ and Japanese Government bonds again all widened slightly.  Long duration bonds underperformed, while inflation linked securities had a good month.  Australian bonds outperformed global bonds (hedged into AUD) while global investment grade credit underperformed global government bonds.

Market Performance – 28 February 2015

Performance (income and capital gain or loss) %


3 months

Australian Shares (S&P/ASX 300 Accumulation)

6.9% 12.6%

International Shares (MSCI AC World ex-Aust) unhedged

5.3% 11.6%

International Shares (MSCI AC World ex-Aust) hedged

6.1% 4.9%

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

0.5% 2.5%

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

3.7% 16.4%

Australian Bonds (UBS Composite Index)

0.3% 3.6%

Global Bonds (Barclays Global Aggregate (Hedged))

-0.4% 2.5%

Cash (UBS Bank Bills)

0.2% 0.7%

Appreciation of $A against $US

0.5% -8.3%

*Estimate as at 5/3/2015

Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays

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    25 Oct 2013
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    29 Oct 2012
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    18 Jun 2012
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    25 May 2012
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    08 May 2012
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    22 Apr 2012
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    19 Mar 2012
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    14 Mar 2012
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    22 Nov 2011
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    21 Nov 2011
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    09 Aug 2011
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    12 Apr 2011
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    25 Feb 2011
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    11 Jan 2011
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    30 Nov 2010
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    28 Oct 2010
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    27 Oct 2010
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