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Market Reviews

Market Review September 2021

Monthly Market Review – September 2021

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How the different asset classes have fared: (As at 30 September 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

International Equities

International share markets (unhedged) fell by -3.04% in September. The performance of hedged and unhedged shares is now fairly similar over longer time periods. However, with a weaker A$, unhedged shares are now outperforming hedged over the past 6 and 12 months. Share markets fell because of concerns about higher inflation and interest rates. The sharp selloff in Chinese property developers weighed on emerging market shares.

The vaccine rollout continues to be a good news story and is progressing well in both the US and Europe, despite concerns about the spread of the “Delta” variant of Covid-19. Market valuation, particularly in the world’s largest share market, remain a key risk, with the US share market trading at valuation levels last seen just prior to the 2000 crash. In other countries valuations are at the upper end of the range, but are nowhere near as excessive as is the case in the US.

Australian Equities

The S&P/ASX All Ordinaries Index fell by -1.6% in September, largely following international markets. There are some risks that the prolonged lockdowns may impact the real economy and market sentiment negatively. However, the Australian vaccine rollout is finally starting to gain momentum, with credible forecasts of 90% vaccination rates likely to be achieved by late October in some states. A risk factor for Australian shares is the continued fall in iron ore prices. The falling value of the A$ will however partially offset these falls.

Domestic and International Fixed Income

Australian government bond yields rose in September, leading to capital losses in Australian and international fixed interest markets. The RBA has quite clearly indicated that Australian cash rates are likely to be held at current levels for at least the next few years. In the US the Federal Reserve is under greater pressure to raise rates.

Australian Dollar

The Australian dollar fell modestly against the US dollar in September. If commodity prices continue to fall as we expect then we would anticipate a lower A$ in the future.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review August 2021

Monthly Market Review – August 2021

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How the different asset classes have fared: (As at 31 August 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

International Equities

International share markets (unhedged) rose 3.09% in August. The performance of hedged and unhedged shares is now fairly similar over longer time periods. However, with a weaker A$, unhedged shares are now outperforming hedged over the past 6 and 12 months. The US share market continues to grind higher and higher. European shares also continue to deliver positive returns. In Asia there are rising concerns about China embarking on a difficult period of structural reform. This is reflected in poorer relative performance of Chinese stocks.

The vaccine rollout is progressing well in both the US and Europe, despite concerns about the spread of the ‘Delta’ variant of COVID-19. Market breadth – which measures participation in the market – is becoming narrower, with fewer and fewer large capitalisation stocks responsible for driving the market higher.

Australian Equities

The S&P/ASX All Ordinaries Index rose by 2.6% in August, largely following international markets. There are some risks that the prolonged lockdowns may impact the real economy and market sentiment negatively. However, the Australian vaccine rollout is finally starting to gain momentum, with credible forecasts of 70-80% vaccination rates likely to be achieved by late October. A risk factor for Australian shares is the continued fall in iron ore prices. The falling value of the A$ will however partially offset these falls.

Domestic and International Fixed Income

Australian government bond yields fell in August, leading to very modest capital gains in Australian fixed interest markets. The RBA has indicated that Australian cash rates are likely to be held at current levels for at least the next few years. Internationally long-term interest rates rose modestly, leading to small capital losses on international bonds.

Australian Dollar

The Australian dollar fell modestly against the US dollar in August. If commodity prices continue to fall as we expect, then we would anticipate a lower A$ in the future. We continue to prefer currency unhedged, to currency hedged investments.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review July 2021

Monthly Market Review – July 2021

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How the different asset classes have fared: (As at 31 July 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

International Equities

International share markets (unhedged) rose by 4.1% in July, helped by the weaker A$. Hedged international shares, which did not benefit from the falling A$, returned 1.8%. The US share market continued to edge higher. European shares also delivered positive returns. Chinese and Hong Kong share markets experienced a more difficult period, with concerns rising amongst property developers who are facing government restrictions on their capacity to borrow, as well as large Chinese technology companies who appear to have fallen out of favour with Chinese authorities.

Overall, share markets continued to be underpinned by a strong recovery due to the on-going rollout of COVID-19 vaccines and lower long-term interest rates. However, there are some areas of concern. Market breadth – which measures participation in the market – is becoming narrower, with fewer and fewer large capitalisation stocks responsible for driving the market higher.

Australian Equities

The S&P/ASX All Ordinaries Index rose by 1.1% in July, supported by continued strength in the domestic economy. Sentiment remains positive, despite the growing number of COVID-19 related lockdowns in NSW and other states. In contrast to the first series of lockdowns in 2020, there are no aggressive stimulus packages currently in place. A key issue for both the Australian share market and the Australian economy is how quickly Australia will roll out its vaccination program. There are some grounds for optimism, with additional vaccine supplies becoming available.

Domestic and International Fixed Income

Both Australian government bond yields and US Treasury yields moved lower in June, leading to capital gains in fixed interest markets. The RBA has indicated that Australian cash rates are likely to be held at current levels for at least the next few years. The rise in capital values for bonds and many fixed interest funds is welcome. However, investors who are depending on fixed interest investments to deliver income are likely to continue to experience low levels of interest rates over the coming periods.

Australian Dollar

The Australian dollar fell by approximately 2% against the US dollar in July and is now lower for the calendar year to date, amid broad US dollar strength. The US dollar rose against most other currencies.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review June 2021

Monthly Market Review – June 2021

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How the different asset classes have fared: (As at 30 June 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

International Equities

International share markets (hedged) rose by 2.1% in June. Movements in share markets over the month were largely driven by comments from members of the US Federal Reserve (Fed) about the timing of future interest rate hikes. Share markets initially fell after the Fed brought forward the timeline of expected interest rate hikes at its June meeting due to the stronger-than-expected economic recovery (the median expectation of Fed officials showed two rate hikes in 2023 from zero after their March meeting). However, share markets rebounded after Fed Chair Powell calmed markets by reiterating that the recent spike in inflation is likely to be temporary, and it will prioritise a “broad and inclusive” recovery of the jobs market before raising interest rates.

Overall, share markets continued to be underpinned by a strong recovery in the global economy, the ongoing rollout of vaccines and the prospect of further significant fiscal stimulus in the US.

Global inflation readings continued to increase in June. However, economists largely expect the current spike in inflation to be transitory. The key drivers of the recent increase in global inflation are base effects (as last year’s deflation drops out of annual calculations), higher commodity prices, supply chain bottlenecks (due to production curbs during the pandemic) and consumers switching spending from services to goods.

Australian Equities

The S&P/ASX All Ordinaries Index rose by 2.6% in June, supported by continued strength in the domestic economy. The release of GDP data for the March quarter showed that the economic recovery in Australia has been V-shaped, with the level of output in Australia now above its pre-pandemic level; not many other countries are in this same position. The employment data for May showed a strong increase in employment and a fall in the unemployment rate from 5.5% to 5.1%. The level of employment in Australia is now also above its pre-pandemic level. Australia and New Zealand are the only advanced economies where this is the case. The housing market in Australia also remains strong, with housing finance commitments continuing to boom in April, driven by existing owner occupiers and investors.

As was the case for international equity markets, the domestic share market was also impacted by comments from Fed members during the month regarding the timing of future interest rate increases in the US (see above).

Domestic and International Fixed Income

Australian government bond yields and US Treasury yields both drifted modestly lower in June, despite early indications that some central banks may start tapering sooner than expected given the recent strength in economic data. In mid-June, the Fed brought forward its timeline of expected interest rate hikes, causing a sell-off in equities markets. However, bond yields were largely stable, having already increased sharply earlier in the year in response to higher inflation expectations.

Australian Dollar

The Australian dollar fell by around 3% against the US dollar in June, to its lowest level since December last year, amid broad US dollar strength. The US dollar rose against most currencies after the Fed brought forward its timeline of expected interest rate hikes at its monetary policy meeting in mid-June.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review May 2021

Monthly Market Review – May 2021

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How the different asset classes have fared: (As at 30 May 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Australian and International Equities 

May was a volatile month for equity markets. Inflation worries caused a fall in the first half of the month with the ASX All Ords down -1.83% at one stage. It rebounded strongly in the second half of the month, posting a 1.96% gain at the close of May. This was an impressive 3.75% rebound from the lows of the month. International equities in both developed and emerging markets also had a strong end to the month as inflation worries eased.

In the first half of the month, inflation worries were at the forefront of investors’ minds due to strong commodity prices and supply chain constraints. Commodity price increases were widespread across several areas such as steel, lumber, oil and corn. Iron ore and copper rallied to all-time highs in mid-May. Commodity prices generally surge following a recession. This is because firms cut back during a recession and cannot ramp up production as quickly once demand comes back. Supply chain constraints also saw shortages of certain goods leading to an increase in prices. Notable was the shortage in new cars and price rises the second-hand car market. These factors contributed to the initial losses in the ASX early in the month, as investors worried about the impact of higher inflation on equity markets. Historically higher inflation has been a negative for equities in the short to medium term, as companies dealt with higher input prices and the potential increase in interest / borrowing rates.

During the second half of the month, inflation worries lessened as investors questioned whether the uptick will just be transitory due to the opening of economies. Commodities fell from their highs and cryptocurrencies saw a sharp decline as China signaled their intention to curb commodity price rises and implement greater scrutiny over cryptocurrencies. Bitcoin fell from a high of $58.9k to $34.7k within the month – a decline of over -41.0%.

Domestic and International Fixed Income

Global and domestic bond yields remained stable over May. However, there were early indications that many central banks may start tapering sooner than expected given the recent economic data.

COVID and vaccines

COVID concerns remain at the forefront. While case numbers across the world have been declining, there is no room for complacency as evidenced by the recent lockdown in Melbourne. Concerningly, other countries such as Vietnam and Taiwan, which have been successful in dealing with COVID have seen renewed increases in the number of cases. The vaccine roll-out continues across the world. Approximately 8.0% of the population of emerging countries have been vaccinated vs 38.0% in developed countries.

Australian Economy

Notwithstanding the recent lockdowns in Melbourne the Australian economy has grown with employment now above pre-COVID levels. The Federal government announced its 2021-22 budget, which will be stimulatory, with an expected deficit of $161 billion. Fortunately, the higher iron ore prices and stronger economic growth will help fund part of the budget rather than the Australian government issuing a massive supply of bonds.

Going forward, key risks include inflation scares, the persistent spread of COVID, the effectiveness of vaccines against new variants and geopolitical tensions. However, with the vaccine rollout, opening of economies, fiscal stimulus, and rates still at low levels, the local and global economies look well placed to continuing growing.

Australian dollar

The Australian dollar has been steadily weakening since mid-May with the fall in commodity prices.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review April 2021

Monthly Market Review – April 2021

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How the different asset classes have fared: (As at 30 April 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Australian Equities 

April was a great month for the Australian Share market with the S&P/ASX All Ord rising 3.92% over the period.  Traditionally the month is a strong month for the share market as the end of financial year approaches. A great deal of the positive momentum can also be attributed to low interest rates, market stimulus and a rebound of economic activity. Materials was the best performing sector, driven largely by stronger metal prices and a slightly weaker US dollar. Technology also did well, due to by a decline in Australian bond yields. Energy was the worst performer with coal being a notable area of weakness within energy, as investor sentiment towards the carbon emitting sector sours.

International Equities

The global recovery is continuing to gather momentum with the IMF revising up its 2021 global growth forecast to 6.0%. The recovery has been positive for share markets which benefit from rising earnings and low interest rates. US stocks did well, buoyed by multiple signs of economic recovery including an impressive jobs report, a jump in retail sales, and a pick-up in housing. European markets also moved higher, lifted by solid corporate earnings and the progress made by EU countries in vaccine distribution. A recent surge in Covid cases plaguing India and Brazil has put pressure on these emerging economies and their markets. Overall, the performance of emerging market equities was flat. The slow vaccine rollout in the developing word is holding back emerging market stocks.

Domestic and International Fixed Income

Global and domestic bond yields eased back in April as central banks reiterated their desire to keep accommodative financial conditions. The recent stability in bond yields enabled share markets to resume their rising trend after a few wobbles earlier in the year.

Australian dollar 

The Australian dollar continued to maintain its strength in April. Strong commodity export prices have helped keep the dollar strong.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review March 2021

Monthly Market Review – March 2021

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How the different asset classes have fared: (As at 31 March 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Domestic and International Fixed Income

After rising sharply in February, US Treasury yields continued to edge higher in March, reflecting an improving outlook for the global economy due to the ongoing rollout of vaccines and the prospect of further significant fiscal stimulus in the US. At the end March, US President Biden announced a US$2.3 trillion “American Jobs Plan”. The plan focusses on infrastructure spending, spread over eight years, and is proposed to be funded by corporate tax increases spread over 15 years. This plan comes on top of a US$1.9 trillion relief package signed into law by President Biden in early March, and a US$900bn emergency relief package paid out in January.

The Biden administration is expected to announce another package in coming weeks focused on childcare, healthcare and education, which will be funded by tax increases on wealthy individuals. As a result of the huge fiscal packages proposed by the Biden administration, the market is expecting the US economy to recover strongly. The markets’ belief in economic recovery and the inflation that may result have been contributing factors to rising bond yields. However, Central banks remain dovish and have reiterated their commitment to keep easy monetary policy in place for an extended period.

After increasing sharply in February, Australian government bond yields declined slightly in March. Bond prices were supported after the RBA reiterated its commitment to its 3-year bond yield target of 0.1% and reinforced its message that they do not expect the cash rate to increase until 2024 at the earliest. In its March meeting press release, the RBA also flagged that they are “prepared to do more” bond purchases if deemed necessary.

Australian Equities

The S&P/ASX All Ordinaries Index rose by 1.8% in March, underperforming a 4% gain (foreign currency hedged) in international share markets. The best performing sectors for the month were consumer discretionary and utilities. The labour market recovered further in February, with a decrease in the unemployment rate to 5.8%. The Australian housing market also continued to rise in March, increasing by 2.8% according to CoreLogic, which is the fastest monthly increase since the late 1980s. Strength in the housing market has been driven by strong demand from first home buyers.

International Equities

International share markets (foreign currency hedged) rallied by 4% in March. Share markets were buoyed by an improving outlook for the global economy due to the ongoing rollout of vaccines, together with the prospect of further significant fiscal stimulus in the US.

The S&P500 rose by 4.4%, driven by strong gains in value-oriented stocks which are expected to benefit from a strong global economic recovery. By contrast, high multiple and long duration growth stocks, such as US technology stocks, underperformed shorter duration and more cyclically levered-value stocks over the month.

European shares rallied in March, while emerging market shares underperformed due to weakness in Chinese equities. Chinese equities were reportedly weighed down by concerns around earnings and tighter liquidity conditions from the People’s Bank of China.

Australian Dollar

The Australian dollar decreased modestly in March alongside a decline in iron ore prices (albeit from very high levels) and a narrowing in the spread between Australian and US government bond yields.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review February 2021

Monthly Market Review – February 2021

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How the different asset classes have fared: (As at 28 February 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Australian Equities

The S&P/ASX All Ordinaries recorded a gain of 1.43% in February. It was a volatile month for Australian shares due to fears of a return of inflation. The best performing sectors for the month were materials, financials, and energy, which were expected to benefit from an economic recovery as vaccines drive normalisation in the economy and rising bond yields pressure valuations.

Reporting season saw the release of earnings data, with many ASX companies beating expectations. Around 86% of ASX 200 companies reported a profit. The better-than-expected earnings were partly a function of the disruption in 2020 when many companies ditched forecasts entirely, leaving analysts forecasting earnings in the dark, because of the uncertainty stemming from the pandemic.

Australian Property

Whilst listed property fell in February, the residential housing market performed well, rising at its fastest rate in 17 years. The property market has been more resilient than expected, helping the economic recovery and the performance of banks and developers. Much of this growth has been attributed to record low interest rates, multiple government homebuyer and income support measures, pent up demand from lockdowns and a fear of buyers’ missing out.

Australian dollar

Higher than anticipated iron ore prices kept the Australian dollar high, despite the RBA extending its bond-buying program to place downward pressure on the local currency.

International Equities

US Stocks performed well in February with the S&P 500 up 2.61%. This can be attributed to growing optimism surrounding the economic recovery and decreasing number of COVID-19 infections. Nevertheless, attention turned to rising yields on the U.S. 10-year treasury notes. There is growing fear that increasing yields, which are a consequence of an improving economy and greater pricing pressures, will prove competition for stocks. The casualties have been overbought high multiple growth stocks, many of which are traded on the NASDAQ and are tech related. The inevitable stylistic shift back in markets to value-oriented stocks and stocks which are more favourably exposed to rising bond yields appears to be occurring.

Asian and European markets did reasonably well. However, they experienced a strong sell off in the last trading day of the month as investors bet an economic rebound could lead to tighter monetary policy. Technology stocks were hardest hit during the sell off.

Domestic and International Fixed Income

The RBA has an official policy to keep 3-year government bond yields at around 0.1%. To do this, it buys bonds when the yield gets too high. Earlier in the month, the RBA announced another $100 billion in bond purchases, which means the RBA will be buying about $5 billion worth of government bonds every week until at least April. This is intended to help the economy by keeping other interest rates very low. Nevertheless, despite the RBA efforts, long-term 10-year interest rates have doubled since November. That’s because investors are starting to look ahead of the pandemic to possible inflation.

Internationally, central banks from Asia to Europe escalated efforts to calm panicking markets, by pledging to buy more bonds and signaling more policy accommodation, after U.S Treasury yields surged to their highest level in a year.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review January 2021

Monthly Market Review – January 2021

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How the different asset classes have fared: (As at 31 January 2021)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

The year began dramatically. In the US Donald Trump called out to his supporters to help him contest the November US election results, which saw thousands of pro-Trump supporters descend onto the White House. The mob shattered windows, ransacked offices and pounded on barricaded doors. Throughout the chaos, the US stock market continued to rally due to the anticipation of more stimulus for the economy once President Biden enters office.

A disappointing final week of the month led to the S&P/ASX 200 climbing just 0.3% in January. The lackluster performance was linked to investors becoming spooked by extraordinary volatility in stocks with significant short selling exposure. Notwithstanding this most companies saw activity and profits rebound, and with few foreign travel options Australians are spending more at home.

A group of two million members of a Reddit subgroup called r/WallStreetBets (now 10 million members) turned the finance industry upside down late in the month. A short squeeze of the stock of the American video game retailer GameStop and other securities took place, causing major financial consequences for certain hedge funds and large losses for short sellers.

The Australian dollar reached a high of 78 US cents for the month. This has been attributed to rising iron ore prices brought about by news of record-high steel output in China. The strength of the Australian dollar has caused some concern for the RBA due to its impact on growth and inflation.

House prices hit record highs in January, surpassing pre-COVID levels. Every capital city saw an increase in values. This growth can be attributed to various government policies and stimulus measures that helped keep the economy afloat during the pandemic. This included $507 billion in stimulus policies and up to $200 billion by the RBA in near free (0.1 per cent interest) funding for the banks.

Bitcoin experienced a tremendous surge in value. Much of this rise seems to be the result of large flows of institutional money. The current bull run has seen it surpass its previous all-time high of December 2017.

News of several potentially highly effective vaccines against COVID-19 has significantly reduced uncertainty over the global outlook for 2021 and beyond, which is positive for all markets, including Australia. However, there remains the possibility that the existing vaccines may not be effective against all the new mutated COVID-19 variants.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review December 2020

Monthly Market Review – December 2020

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How the different asset classes have fared: (As at 31 December 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

The ASX All Ords has had a strong start in December before the emergence of a new cluster of COVID-19 cases in Sydney’s northern beaches on 9 December 2020 saw markets tempering expectations of a swift recovery. Despite this, the ASX All Ords returned 1.75% in December 2020. Markets were buoyed by strong commodity prices with iron ore rising 20.0% over the month to be up an astounding 152.9% since its April lows. Strong demand from China and supply disruptions in Brazil were behind the price increases. The surge in commodity prices and overall weakness in the US dollar has seen the Australian dollar trade to $0.76, levels not seen since 2018.

Meanwhile, tensions between Australian and China continued to flare during December 2020, with China banning Australian coal exports and Australia taking up action with the World Trade Organisation. Given China’s high reliance on Australia’s iron ore exports, the impact is expected to be limited. In addition, the incoming Biden administration is expected to try and resolve the US/China tensions in a more diplomatic way, paving the way for Australia to resolve tensions with China too.

New global coronavirus cases continued to climb although at a slower pace. While the mortality rate in developed countries has dropped from 8.5% to around 2.0%, the number of deaths is approaching April highs and some hospitals are at or near capacity. Alarmingly, in the UK, a new strain of COVID-19 was discovered to be more infectious, though not necessarily more severe. This led to more than 40 countries suspending travel with the United Kingdom and a nationwide lockdown.  Thankfully vaccines are still expected to be effective on the new strain. Across the globe vaccines were rolled out, however, supply and transport issues meant the rate of roll out was below expectations. The vaccine rollout is not expected to help with the current wave but should significantly help the recovery in the second half of 2021.

With the rise in global coronavirus cases, major governments around the world continued to reiterate their support for the economy with the ECB and the US committing to stimulus support. The ECB increased its pandemic emergency purchase program from €1.35tn to €1.85tn and extended the program to March 2022. The US also passed a nearly $900bn stimulus bill. While not as large as many had expected the stimulus is big enough to hold off a recession.  Markets reacted positively to these announcements. Finally, after years of negotiation, the Brexit agreement was completed and signed between the UK and the European Union.

 Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

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