Market Summary | September 2018
Market Overview
A mixed month in September for global markets as a range of global economic results were released. The Australian market returned its first negative month since March, whilst economic growth slowed across Europe. Surprisingly, both combatants of the trade war delivered a strong return, as tensions continue to increase between the nations.
September also saw Amazon follow Apple in becoming the second company in history to achieve a market capitalisation of 1 trillion dollars as a result of their highly successful global rollout.
United States
The US economy continued its positive momentum in September. There are concerns however, that the introduction of Trumps tax cuts has led to excessive growth in the shorter term. A rising US dollar and slowing housing market is expected to slow the US market.
At its September meeting the Federal Reserve voted to raise the funds rate for the third time in 2018, hiking by 25 basis points to a target range of 2.00–2.25%. This was based on a backdrop of strong jobs growth and robust consumer spending and business investment.
Tesla dominated the headlines as Elon Musk was stripped of his position as chair of the company, following his tweet stating his intentions to take the company private at $420 per share.
The S&P 500 rose 0.43%.
Asia
The news out of China has been mixed over the past month. The crackdown on credit growth in the shadow banking sector has been a significant factor behind the weakness in investment spending, although modest fiscal stimulus and easier liquidity conditions in the traditional banking market has supported growth. Stimulus may be needed to offset export growth, with the US imposing tariffs on US $200 billion of Chinese exports in September, which is estimated to wipe 0.5 percentage points off Chinese GDP growth.
Despite these concerns, the Chinese Shanghai Shenzhen CSI 300 PR Index rose 3.13% in September outperforming their US counterpart.
Japan’s Nikkei 225 Index returned 5.49%.
Hong Kong’s Hang Seng fell 0.36%.
Europe
Across Europe broadly, the month of September was relatively quiet with Italian, French and Spanish consumer price index (CPI) numbers all lower than estimated.
With less than 6 months until the UK is scheduled to leave the EU, politicians continue to disregard any proposal made by Prime Minister Theresa May. A deal is looking increasingly unlikely before the impending deadline with discussions of another vote beginning to surface.
The UK’s FTSE 100 rose 1.05%.
Australia
September saw Australian farmers suffer a further blow, however this time much more sinister with the contamination of strawberries using needles and pins. Newly appointed Prime Minister Scott Morrison announced a royal commission into aged care quality & safety following more than 5,000 submissions received from aged care consumers, families, carers, aged care workers, health professionals and providers.
The Federal Government’s announcement of a royal commission into the aged care sector also impacted care providers Estia Health (-22.3%) and Fisher & Paykel Healthcare (-8.1%), which will begin engaging on the terms of reference of the inquiry.
At its September meeting, the RBA continued to hold rates at 1.50%, citing concerns around current levels of household debt. The ASX 200 A-REIT Index returned -1.8% in September as the sector is becoming increasingly under pressure.
The ASX 200 was down -1.30% in September off the back of poor performances from the financials (-2.2%) & Healthcare (-7.7%) sectors with healthcare giant CSL falling -11.5% for the month. The best performer was Vocus Communications which rose over 15%.
Market Returns (last 12 Months)
Markets have had a positive 12 months. Returns have been positive in all growth asset classes. Equity markets generally have performed well while fixed income and cash returns remain at historically low levels. The month of September provided missed returns across the asset classes with stronger performance coming from International Equities.
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.