- January was a more positive month for investors after December’s volatility, with shares recovering most of their late 2018 losses. Global shares rose by 7.1% and 4.1% in hedged and unhedged terms respectively.
- US shares, having led December’s decline, performed strongly, ending the month up 7.9%. They were boosted by the US Federal Reserve’s decision to leave interest rates on hold and its dovish communications around future tightening.
- The longest government shutdown in the US’s history, although now over, may slow GDP growth sooner than had been expected.
- Economic growth in the eurozone has also slowed, negatively affected by political instability and trade tensions, amongst other factors.
- The US and China, whose ongoing trade war contributed to market jitters in 2018, may be on their way to an agreement, although relations are still far from cordial.
- China’s growth is slowing, with poor manufacturing figures and exports also down. There are also concerns about its high corporate debt, currently at 162% of GDP. Careful government policy will be required to manage the transition to a slower economy.
- The Australian dollar gained ground, ending the month at almost US73c, supported by rocketing iron ore prices and a softer USD.
Major asset class performance (%)
|Asset classes||1 month||12 months||5 years (p.a.)|
|Global Shares (hedged)||7.1||-4.7||9.6|
|Global Shares (unhedged)||4.1||3.8||11.0|
|Global Emerging Markets (unhedged)||5.0||-4.8||8.6|
|Global Small Companies (unhedged)||6.5||2.0||10.3|
|Global Listed Property||10.1||8.2||9.6|
|Australian Fixed Income||0.6||5.5||4.6|
|International Fixed Income||1.0||3.3||4.7|
Source: JP Morgan & ANZ Wealth, 31January 2019.
Indices: Australian shares – S&P/ASX 300 Accumulation; Global shares (hedged/unhedged) – MSCI World ex Australia Net; Global emerging markets – MSCI Emerging Markets Net in AUD (unhedged); Global small companies (unhedged) – MSCI World ex Aust Small Cap; Global listed property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged); Cash – Bloomberg Bank Bill; Australian fixed income – Bloomberg AusBond Composite 0+ Yr Index; International fixed income – Barclays Global Aggregate Bond Index (hedged).
|Exchange rates||At close on 31/12||% change
|% change 12 months|
|Trade weighted index||61.6||1.5||-6.1|
|Source: Bloomberg & ANZ Wealth, 31 January 2019. All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.|
The team at Intergenerational Wealth
Disclaimer: This information is current as at 31 January 2019 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.