Market Wrap – March 2022

Russia’s invasion lifts market uncertainty
    • Russia’s invasion of Ukraine dampened growth expectations in February. As Russia is such a large commodity exporter, investors were concerned that energy prices could spiral higher, leading to elevated or more persistent inflation that would hit growth.
    • The invasion of Ukraine came at a time when investors were already fearing a greater speed and/or size of interest rate rises, but the war saw expectations settle back somewhat towards the end of the month as growth expectations were wound back.
    • International shares finished the month down -2.8% (hedged) and -5.5% (unhedged).
    • The Australian share market was a relative outperformer gaining 2.1% reflecting the high commodity exposure of the market, a strong shift back from January’s lows.
    • Local shares were supported by a lift in commodity prices with gains in resources stocks offsetting weakness in most other sectors.
    • Emerging markets fell on rising energy prices, returning -5.8%.

 

Economic indicators rebalance
      • US economic data was mainly positive, with manufacturing conditions rising and employment levels remaining strong.
      • China’s business conditions remained soft but possibly stabilising, suggesting growth may have based.
      • As expected, Australia saw a rebound in consumer spending reflecting the lift in lockdowns for East coast states and leading economic indicators recovered solidly.

 

RBA holds
      • The Reserve Bank of Australia (RBA) held to its current policy settings at its 1 March meeting.
      • Oil prices continued to surge with oil rising above USD 100 a barrel on Russia’s invasion of Ukraine.
      • As investors fled to safety gold prices rose.
Major asset class performance (%)

Asset classes

1 month

12 months

5 years (p.a.)

Australian shares

2.1

10.2

8.6

International shares (hedged)

-2.8

12.3

11.2

International shares (unhedged)

-5.5

18.3

13.5

International emerging markets (unhedged)

-5.8

-4.7

8.2

International small companies (unhedged)

-2.8

6.6

10.9

Global listed property

-2.9

16.4

4.8

Cash

0.0

0.0

1.1

Australian fixed interest

-1.2

-1.1

2.7

International fixed interest

-1.3

-2.3

2.4

 

Source: JP Morgan and IOOF, 28 February 2022.

Indices: Australian shares: S&P/ASX 300 Accumulation | International shares (hedged/unhedged): MSCI World ex Australia Net | International emerging markets: MSCI Emerging Markets Net in AUD (unhedged) | International 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 interest: Bloomberg AusBond Composite 0+ Yr Index | International fixed interest: Barclays Global Aggregate Bond Index (hedged).

Please note: Past performance is not indicative of future performance.

 

Currency

Exchange rates

At
close on

28/2/22

%

change in 1 month

%

change in 12 months

AUD/USD

0.73

2.77

-4.41

AUD/Euro

0.65

2.91

-0.06

AUD/Yen

83.51

2.62

-0.71

Trade weighted index

60.60

2.19

-5.16

 

Source: Bloomberg and IOOF, 28 February 2022. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

 

Source: https://investmentcentral.ioof.com.au/home/home-article/Market-Watch-February-2022

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