Transcript BT Monthly Markets Chart Pack

BT Monthly Markets Chart
Pack – March 2009
An overview of movements in global financial markets
After two months of losses, global share markets
rallied significantly in March...
 After two consecutive months in the red, global share
markets were finally able to turn things around in March
after the US government unveiled plans to remove toxic
assets from the books of the country’s banks. This was
enough to push the US market 7.7% higher for the month
and had a positive knock-on effect on share markets
elsewhere, with stocks in Europe (+4.8%), the UK (+2.5%)
and Japan (+7.2%) all closing March in the black.
 The Australian share market finally ended its six-month
losing streak in March, with the S&P/ASX 200 Accumulation
Index closing the month 8% higher thanks to a strong lead
from the US market and improved investor sentiment.
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…and continue to perform well over the long-term,
despite some major market events
Impact of major market events on global shares since 1987
6,200
Jul 01
Tech Wreck
5,700
Jun 07
US Sub-prime
Crisis
5,200
4,200
Aug 97
Asian Currency
Crisis
3,700
3,200
Nov 89
Fall of the
Berlin Wall
2,700
2,200
1,700
Sep 01
Attack on
Twin Towers
Jul 98
Russian Bond
Crisis
4,700
Oct 87
Wall Street
crash
Feb 94
Bond Market Crash
Mar 03
Troops enter
Iraq
Jan 91
Gulf War
1,200
700
Mar-87
Mar-89
Mar-91
Mar-93
Mar-95
Mar-97
Mar-99
Mar-01
Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$.
Source: BT Financial Group, MSCI
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Mar-03
Mar-05
Mar-07
Mar-09
The Australian share market closed 8% higher in
March
S&P/ASX 200 Accumulation Index – year to 31 March 2009
39,000
37,000
35,000
33,000
31,000
29,000
27,000
25,000
23,000
21,000
31/03/2008
31/05/2008
31/07/2008
Source: BT Financial Group, Premium Data
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30/09/2008
30/11/2008
31/01/2009
31/03/2009
Key Australian economic news – March
 The Reserve Bank of Australia cut interest rates by a further 0.25% at its early
April meeting, taking the official cash rate to just 3.00%. Rates are now at their
lowest level since March 1960 and may fall even further in the months ahead as
the Bank tries to jumpstart the economy.
 The economy contracted by 0.5% in the December quarter of 2008, bringing the
total growth for the year to just 0.3%.
 Australia’s trade surplus came in at $970 million in January, much lower than the
market’s pick of $1.1 billion.
 The unemployment rate jumped up to 5.2% in February (was 4.8% in January)
after the economy lost 53,800 jobs during the month.
 Building approvals were up 7.8% in February, which was much better than the
market had expected.
Source: BT Financial Group
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The Australian dollar rallies against the US dollar in
March
 The Australian dollar (A$) rallied 8.3% against the US dollar in March, even
pushing past the US$0.70 cents barrier for the first time since 9 January this
year. The gain was largely underpinned by improved sentiment about the
prospects for the global economic outlook and better commodity prices.
However, it’s still difficult to imagine any sort of sustained recovery in the A$ until
we see a similar recovery in the global economy, meaning the local currency is
likely to continue trading around current levels in the near-term.
 At the end of March:
A$1 bought
Source: BT Financial Group
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US$0.6918
+8.3%
€0.5219
+3.3%
¥68.38
+9.8%
The Australian dollar versus the US dollar…
Currency markets – A$ per US dollar
0.9900
0.9600
0.9300
0.9000
0.8700
0.8400
0.8100
0.7800
0.7500
0.7200
0.6900
0.6600
0.6300
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Source: BT Financial Group. Figures at 31 March 2009
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Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
the Euro…
Currency markets – A$ per Euro
0.6550
0.6400
0.6250
0.6100
0.5950
0.5800
0.5650
0.5500
0.5350
0.5200
0.5050
0.4900
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Source: BT Financial Group. Figures at 31 March 2009
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Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
and the Yen
Currency markets – A$ per Yen
110
105
100
95
90
85
80
75
70
65
60
55
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Source: BT Financial Group. Figures at 31 March 2009
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Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Official world interest rate movements – March
 As expected, the Bank of England cut its cash rate to just 0.50% in March while
the European Central Bank lowered its refi rate to 1.50%. Here in Australia, the
Reserve Bank cut its official cash rate by another 0.25% at its early April
meeting. Elsewhere, the Bank of Japan and the US Federal Reserve left their
benchmark rates on hold.
Current rate
Last moved
Australia
3.00%
Apr 2009
US
0% - 0.25%
Dec 2008
Europe (ECB)
1.50%
Mar 2009
Japan
0.10%
Dec 2008
United Kingdom
0.50%
Mar 2009
Source: BT Financial Group
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Direction of
last move
Global share market returns
31 March 2009
1 year
3 years (pa)
5 years (pa)
S&P 500 Index (US)
-39.68%
-14.90%
-6.66%
Nasdaq (US Tech.)
-32.93%
-13.23%
-5.18%
Nikkei 225 (Japan)
-35.26%
-21.96%
-7.09%
Hang Seng (Hong Kong)
-40.58%
-4.94%
1.37%
DAX (Germany)
-37.49%
-11.88%
1.16%
CAC (France)
-40.36%
-18.68%
-4.99%
FTSE 100 (UK)
-31.15%
-13.01%
-2.19%
S&P/ASX 200 Accum. Ind.
-29.52%
-7.25%
5.50%
S&P/ASX Small Ordinaries
-45.77%
-13.82%
-1.15%
S&P/ASX 300 Listed Prop.
-58.05%
-25.76%
-10.27%
Global
Australia
Source: BT Financial Group
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Short-term asset class performance
1-year rolling returns to 31 March 2009 (%)
2009
2008
2007
2006
2005
2004
2003
2002
Best performing
asset class for the
year
2001
2000
1999
1998
1997
1996
1995
1994
Australian
cash
6.69
6.99
6.21
5.80
5.56
5.11
4.91
4.77
6.36
5.24
5.09
5.41
7.14
7.89
6.21
5.08
Australian
bonds
12.77
4.29
3.70
6.74
4.80
4.17
10.09
2.35
11.82
1.79
6.65
15.68
12.56
12.80
2.37
6.00
Australian
property
-58.05
-24.16
28.62
18.48
19.97
13.94
13.84
17.38
13.03
2.91
4.26
28.76
19.95
4.71
1.82
17.38
Australian
shares
-29.80
-7.21
22.03
30.22
25.40
23.83
-11.93
12.42
3.48
14.25
10.86
17.51
13.62
20.92
-2.33
23.13
International
bonds
7.02
8.01
6.38
4.85
6.82
7.66
13.38
5.73
10.83
1.66
8.43
12.55
10.01
14.58
5.55
5.83
International
shares
-24.48
-14.56
1.47
27.96
8.80
13.74
-33.38
-12.67
-7.05
27.06
18.40
56.60
9.13
12.51
4.56
14.05
Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A
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Short-term asset class performance (cont’d)
1-year returns to 31 March 2009 (%)
31 March 2008
31 March 2009
4.3
Australian bonds
Listed property
Australian shares
12.8
-24.2
-58.1
-7.2
-29.8
8.0
7.0
Global bonds
Global shares
-14.6
-24.5
Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A
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Long-term asset class performance
31 March 2009
$24,000
$22,500
$21,000
$19,500
$18,000
$16,500
$15,000
$13,500
$12,000
$10,500
$9,000
$7,500
$6,000
$4,500
$3,000
$1,500
$0
Australian shares
Listed property
Global shares
Australian bonds
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Note: Accumulated returns based on $1,000 invested in December 1984
Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, UBS Bank Bill 0+ years
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Cash
Oil prices rose for the second month in a row in March
thanks in large part to improved investor optimism
Oil prices – US$ per barrel
$150
$135
$120
$105
$90
$75
$60
$45
$30
$15
$0
89
90
91
92
93
94
95
96
97
98
99
00
01
02
Source: BT Financial Group. West Texas Intermediate oil price at 31 March 2009
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03
04
05
06
07
08
09
Summary

Evidence continues to suggest that the Australian economy is on the brink of its
first since recession since 1991, particularly with GDP growth falling 0.5% in the
last quarter of 2008 and the unemployment rate jumping to 5.2% in February.

The Reserve Bank’s decision to lower interest rates to just 3.00% in April came
as no surprise after further evidence emerged that the economy has continued
to weaken. Expectations are that the Bank will look to lower the official cash rate
again in the months ahead, particularly if GDP growth falls for a second
successive quarter.

With global growth likely to slow even further and with commodity prices likely to
remain under pressure in the months ahead, it’s hard to see any sort of
sustained recovery in the Australian dollar in the near-term.

Gains in global share markets, including here in Australia, are likely to remain
under pressure in the near-term, particularly as global growth continues to slow
down.
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