Market Insights
Fund Update
The Fund returned 0.62% over the month of May, delivered 2.29% for the previous three months and 11.96% over the past 12 months. The Net Asset Value (NAV) of the Fund, as at 31 May 2014, was $45.6m1 and the redemption price was 1.3698492. While risk assets have... Read more...Above trend economic growth
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Australian annual economic growth pushed above long-term 3.1% trend growth in Q1 2014 and by quite a margin accelerating to 3.5% y-o-y from 2.7% y-o-y in Q4 2013. Above trend economic growth combined with signs of the unemployment rate starting to decline and annual CPI inflation at 2.9%, very close to the top of the RBA’s 2-3% target range, would normally mean only one thing for the RBA’s cash interest rate – it will soon be moving upwards, especially as it is currently lodged at a very accommodating, 60-year low of 2.50%. The RBA, however, is showing no signs that an interest rate increase is in the wind. Instead, the RBA continues to signal that a protracted period of interest rate stability lies ahead, but predicated on a view that the strength in various key economic readings in Q1 will not gather pace in Q2.
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Read more...Market Commentary 10 June 2014
Read more...Market Drivers
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Risk assets were stronger in May amid more evidence that the US economy was starting to rebound from its severe winter-weather setback in Q1 2014 and that economic growth in China was stabilising after the softer patch early in the year. While economic growth signs were patchier in Europe, market expectations intensified that the European Central Bank might ease monetary policy soon in order to limit the risk of deflation in Europe. In Australia, declining iron ore prices and a tough Federal Budget added to concerns that economic growth would face substantial headwinds over the next year or two. Major equity markets were stronger in April with gains mostly ranging from 1.0% for the British FTSE 100 to 3.5% for the German DAX. The US S&P 500 was up 2.1% and finished May at a record high. The Australian ASX 200 was an exception to the relatively strong gains in most major markets rising by only 0.1% in the month and weighed by a relatively soft resources sector on weaker commodity prices.
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