July 2017 Overview

Key drivers of performance during the month included:

  • A supportive policy environment, economic backdrop and broad based rise in commodity prices drove strong performance from risk assets.
  • The Australian dollar rose strongly, reaching its highest level in over a year.

This environment proved to be favourable for portfolios that held relatively larger exposures to hedged developed market equities and non-government debt.

Key factors impacting financial market performance during the month were:

Equity Markets

  • Global equity markets posted positive returns, buoyed by a strong economic backdrop and supportive fiscal and monetary policy settings in much of the world.
  • Domestic equities were flat, as a confluence of factors offset each other.
  • The economic backdrop remained strong.
  • Key European economic data releases showed that sentiment was improving, while data out of the United States demonstrated that the economic recovery remains resilient. This point was reiterated by US corporate reporting season, with most sectors showing strong revenue and profit growth.
  •  A supportive policy environment continued to bolster equity markets. Messaging from several central banks continued to support risk assets as investors were assured that supportive policy measures would be removed gradually.
  • US equities continued to be supported by the hope that Trump would be able to pass the more business friendly aspects of his legislative agenda.
  • Domestic equities were flat. On the positive side, a rise in iron ore and oil prices boosted the commodity sensitive parts of the market, while an improvement in economic outlook bolstered consumer orientated sectors.
  • These positives were offset by a rise in the Australian dollar, which weighed on the currency sensitive, export orientated pockets of the market.

Debt Markets

  • Global government bond markets produced positive returns.
  • Driving this result was central bank commitment to a gradual approach to increasing interest rates, as well as a fall in investor expectations of future inflation.
  • Corporate bonds and emerging market debt were especially strong as the risk premiums that investors demand for holdings these assets declined.


  •  Currency market movements were driven by similar themes to risk assets.
  • The Australian dollar rose strongly as key commodity prices rose, a theme that also saw emerging market currencies appreciate.
  • The US dollar continued its recent run of weakness, as the US Federal Reserve left interest rates on hold and reiterated their gradual approach to increasing interest rates.