Australian Market Review And Outlook March 2015
Greek debt woes once again dominated newswires during the month. Policy makers from the beleaguered peripheral Eurozone nation reached an 11th hour deal to extend the country?s financing by another four months – effectively kicking the can down the road. Nonetheless markets cheered the news, which helped buoy sentiment and send European bourses to record highs.
Also aiding investor confidence during February was a perceived set of dovish comments from Fed Chair Janet Yellen. In the central banker?s semi-annual testimony she noted that the path of policy remains largely data dependent.
Looking ahead there appear to be few potential catalysts on the horizon that could sour sentiment. Yet as history would show – market turning events are seldom forecast in a timely manner.
In terms of domestic macro news, the RBA?s decision to slash rates to a new record low was the key event of the month. Reinforcing the need for looser monetary policy was the release of domestic labour market data – which revealed an unanticipated jump in unemployment to a 14 year high.
Australian Equity Market
The local sharemarket enjoyed a seemingly parabolic ascent during the month, posting a gain of over 6%. While a more broadly optimistic global outlook helped drive the market higher, a number of local factors also contributed to gains. This included the cash rate cut, and the weaker Australian Dollar.
Half-year earnings results generated a wide dispersion of returns among ASX stocks. The market rewarded those that were able to deliver low cost earnings growth and maintain their dividend policy.
Domestic Property Market
The local property market has shared in the gains witnessed by other asset classes at the outset of the year. The latest house price figures from RP data for January revealed a rise of 1.3% month on month. The RBA?s rate cut has raised speculation that the market may run further. Local banks were quick to pass on the reduction by slashing mortgage rates.