Market Summary | March 2019
MARKET OVERVIEW
Markets globally continued to rise in March albeit at a slower rate in comparison to January and February. This capped off a strong quarter for equity markets globally with most indices recovering much of 2018’s pullback.
Notably the Australian equity market now has a positive six month return however many global markets still have some work to do.
UNITED STATES
Markets had a slow start in March, with the decline in US growth numbers forcing the Federal Reserve to change their expectations for the next interest rate move. Many market commentators now believe that rates will be on hold for much of 2019.
Some of the more notable news for the US economy in March came from the car industry. Statistics show that Tesla is on track to outsell both BMW and Mercedes in the US. This sends a strong message to the traditional car manufacturers as there has been a notable swing in consumer preference. This also begs the question if Telsa can continue to meet demand and overcome manufacturing issues.
March also saw the Initial Public Offering (IPO) of $24b transport company Lyft, the largest IPO since China’s Alibaba in 2014. The shares have slid considerably since listing which does not bode well for rival Uber who are still yet to turn a profit.
The S&P 500 Index (USD) rose 1.79% for the month of March.
ASIA
As the likelihood of a trade resolution increased throughout March, the positive sentiment continued to flow into equity markets. Chinese shares rose 5.5% taking their return to 28.7% for the quarter.
Economic data out of China has been better over the last quarter however the nation still looks unlikely to meet their GDP growth target of 6-6.5%. Premier Li Keqiang noting “What we faced was profound change in our external environment” and that the trade dispute “had an adverse effect on the production and business operations of some companies and on market expectations”.
The Hong Kong Hang Seng PR Index (HKD) returned 1.46%
The Nikkei 225 PR Index (JPY) returned -0.84%
The Shanghai Shenzhen CSI 300 PR Index (RMB) returned 5.53%
EUROPE
March began poorly for the Eurozone with the revelation that manufacturing was facing its worst period in six years. The European central bank was forced to act, offering cheap loans in an attempt to revive the falling economy. The German car industry has been the engine of the European economy for the last 10 to 15 years. Now as the car industry begins to fall out of favour, it’s becoming increasingly difficult to identify how Europe will turn their economy around.
UK Prime Minister May’s Brexit deal was convincingly rejected by the parliament three times. May’s plan is to negotiate with Labour leader Jeremy Corbyn to craft a bipartisan deal that can pass the House of Commons and be presented to European leaders.
The UK’s FTSE 100 PR Index (GBP) returned 2.89%
The German Dax (EUR) returned 0.09%
AUSTRALIA
With the election now scheduled for May, the federal budget was handed down a month earlier this year. Key takeaways included tax measures to please key voter groups, a further boost to infrastructure spending, and the much-vaunted return to surplus.
Economic data in March suggests the shift in RBA policy bias from tightening to neutral seems totally justified. The extent of the slowdown and the evidence for 2019 to date would suggest that the RBA might be in a position to ease interest rates at some stage in 2019.
After rising 10.1% over January and February, the S&P/ASX 200 Index paused in March, returning 0.7% before regaining momentum in the first week of April. The top performing sector in March was Communications (+4.0%), with gains from Telstra (+6.1%) and TPG (+4.4%), which is still awaiting the ACCC’s approval for its Vodafone merger, despite announcing its plans in August last year.
The best performing stock Bellamy’s returned +36.2% in March, rocketing higher despite no significant announcements. Investors are possibly anticipating its SAMR accreditation which is required to sell Chinese-labelled products within mainland China. Bellamy’s strong share price helped to lift the Consumer Staples sector (+3.9%).
MARKET RETURNS (LAST 12 MONTHS)
Recent performance has pushed equities back into positive territory whilst returns from International Equities (AUD dollar Terms), Fixed Income & Cash remain positive.
March’s performance provided positive returns across equity markets. With both global and Australian equities performing similarly over the last 3 months.
The above graph summarises the performance of the major financial markets and gives you an indication of how these markets performed over the last 12 months. The graph does not reflect your actual portfolio performance.