Investment Update for 2017/18
with Funds SA Chief Investment Officer - Richard Friend
June 2019 Overview
Key drivers of performance during the month included:
- Global equities outperformed government bonds.
- Australian equities were positive but underperformed most of their global counterparts.
- Non-government bonds outperformed government bonds.
This environment was favourable for portfolios with relatively larger allocations to equities.
Key factors impacting financial market performance during the month were:
Equity market performance was positive, a reversal from the previous month.
A G20 meeting was held in Japan, which also resulted in the US and China agreeing to resume trade negotiations with no escalation in tariffs.
In Europe consumer price inflation remained steady with the European Central Bank President stating that unless inflation improves, more interest rate cuts may be required.
Sentiment improved as monetary policy moved to an easing bias, which proved a good environment for equity markets.
- The Reserve Bank of Australia cut interest rates from 1.5% to 1.25%. The decision was based on supporting employment growth and providing confidence that inflation will be consistent with the target in the medium term. This helped domestic equities generate a positive return, though they underperformed most of their global counterparts.
- Global government bond markets produced strong positive returns over the month, but underperformed non-government bonds.
- Corporate bonds, emerging market debt and high yield bonds all posted strong positive returns.
- Domestic bonds posted positive returns but underperformed global bonds given concerns around the global economic outlook and falling inflation expectations.
- The Australian dollar appreciated due to increases in commodity prices.