Each month we release the Market Wrap that is compiled by our Chief Investment Office (CIO). Please do not hesitate to contact your adviser to discuss any points which you find of interest!
Fed raises rates though markets pause
- Global share markets paused in the month following rising volatility on the back of lower oil prices.
- The Fed raised interest rates by another 25bps following better economic conditions although the market remains somewhat sceptical of the Fed’s positive outlook for inflation given softer data in recent months.
- Bond yields rose sharply towards the end of the month due to the change in central bank rhetoric in preference for higher policy rates. Australian and global fixed income returns were down as a result.
- Credit markets have performed well although the energy sector has been negatively impacted due to lower spot prices and higher debt costs.
- The US dollar (USD) continued to soften against most other major currencies. The AUD rose by 3.5% as investors start to build a long position.
- Emerging market shares and bonds rose in the month following stronger Chinese activity data and trade flows. MSCI’s decision to include domestic Chinese shares into the emerging markets index also helped boost returns.
- Australian economic indicators remain mixed but stronger labour market data and business confidence suggest a degree of resilience in underlying growth.
Major asset class performance (%)
| Asset classes | 1 month | 12 months | 5 years (p.a.) |
| Australian Shares | 0.2 | 13.8 | 11.6 |
| Global Shares (hedged) | 0.1 | 20.5 | 15.4 |
| Global Shares (unhedged) | -2.6 | 14.7 | 18.2 |
| Global Emerging Markets (unhedged) | -2.0 | 20.1 | 10.2 |
| Global Small Companies (unhedged) | -1.5 | 17.5 | 20.0 |
| Global Listed Property | 0.9 | -0.1 | 11.1 |
| Cash | 0.1 | 1.8 | 2.5 |
| Australian Fixed Income | -0.9 | 0.3 | 4.3 |
| International Fixed Income | -0.2 | 0.5 | 5.5 |
| Source: JP Morgan & ANZ Wealth, 30 June 2017.
Indices: Australian Shares – S&P / ASX300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia, Global Emerging Markets – MSCI Emerging Free Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg Composite Bond All Maturities, International Fixed Income – Barclays Global Aggregate Bond Index (hedged). Please note: Past performance is not indicative of future performance. |
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Currency
| Exchange rates | At close on 30/6 | % change 1 month | % change 12 months |
| AUD/USD | 0.77 | 3.0 | 3.0 |
| AUD/euro | 0.67 | 1.6 | 0.3 |
| AUD/yen | 86.18 | 4.7 | 12.8 |
| Trade weighted index | 65.5 | 2.6 | 3.4 |
| Source: Bloomberg & ANZ Wealth, 30 June 2017. All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance. |
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Disclaimer: This information is current as at 5 July 2017 but is subject to change. This information is issued by OnePath Funds Management Limited (OFM) ABN 21 003 002 800 AFSL 238342. OFM is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 but is not a bank. The information is general in nature and does not take into account a potential investor’s personal needs, objectives and financial circumstances. This information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. Before acting on this information, potential investors should consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Potential investors should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether the particular product is right for them. Although all the information in this document is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Whilst care has been taken in preparing this material, ANZ and its related entities do not warrant or represent that the information, opinions or conclusions contained in this document (“information”) are accurate. To the extent permitted by law, ANZ 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 subscribed capital is not guaranteed.