Presentation on theme: "BT Monthly Markets Chart Pack – June 2008 An overview of movements in global financial markets."— Presentation transcript:
BT Monthly Markets Chart Pack – June 2008 An overview of movements in global financial markets
2 Global share markets slump in June... Global share markets fell sharply in June. In the world’s biggest market - the US - the Dow Jones Industrial Average slumped more than 10% over the month - the worst June for the Index since an 18% tumble during the Great Depression back in 1930. The underperformance of the US market was felt globally, with most other share markets also closing the month firmly in the red. The Australian share market was not immune to the volatility that affected other global markets, with the S&P/ASX 200 Accumulation Index closing the month 7.5% lower amid talk of further domestic rate hikes and a very weak lead from the US. So far this year, the local market is down 16% after having fallen as much as 19% in mid-March.
3 Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$. Source: BT Financial Group, MSCI Impact of major market events on global shares since 1986 …but continue to perform well over the long-term, despite some major market events Jan 91 Gulf War Feb 94 Bond Market Crash Aug 97 Asian Currency Crisis Jul 98 Russian Bond Crisis Jul 01 Tech Wreck Sep 01 Attack on Twin Towers Jun 07 US Sub-prime Crisis Oct 87 Wall Street crash Nov 89 Fall of the Berlin Wall Mar 03 Troops enter Iraq
4 Source: BT Financial Group, Premium Data S&P/ASX 200 Accumulation Index – 2008 The Australian share market closed June 7.5% higher
5 Key Australian economic news – June The Reserve Bank of Australia (RBA) left interest rates on hold at 7.25% following its early July meeting. Inflation is still a major concern and the RBA has clearly retained a tightening bias. The Australian economy grew more than expected in the first quarter of 2008, with headline GDP growth coming in at 0.6%. Growth for the December quarter 2007 was revised slightly higher, from 0.6% to 0.7%. The local job market was modestly weaker in May, losing 19,700 jobs, though the latest figures come after an upwards revision to last month’s gain. The unemployment rate remained steady at 4.3%. Australia’s current account deficit was $19.5 billion in the March quarter, or 6.9% of GDP. Building approvals came in much stronger than expected in April, up 7.8% for the month versus the market’s pick of a 0.5% fall. Source: BT Financial Group
6 The Australian dollar little changed in June The Australian dollar (A$) ended the month little changed against the US dollar, despite expectations that the US Federal Reserve will soon begin to raise interest rates as it tries to contain rising inflation. However, with commodity prices still at very high levels and with the threat of further interest rate hikes here in Australia later this year, the A$ looks set to remain at elevated levels for some time yet. At the end of June: A$1 boughtUS$0.9578 +0.2% €0.6081 -1.1% ¥101.59+0.8% Source: BT Financial Group
7 Currency markets – A$ per US dollar Source: BT Financial Group. Figures at 30 June 2008. The Australian dollar versus the US dollar…
8 Currency markets – A$ per Euro the Euro… Source: BT Financial Group. Figures at 30 June 2008.
9 and the Yen Currency markets – A$ per Yen Source: BT Financial Group. Figures at 30 June 2008.
10 Official world interest rate movements – June The US Federal Reserve, the European Central bank, the Bank of England and the Bank of Japan all left their benchmark interest rates on hold in June. The Reserve Bank of Australia also left rates on hold following its early July meeting. Current rateLast moved Direction of last move Australia7.25%Mar 2008 US2.00%Apr 2008 Europe (ECB)4.00%Jun 2007 Japan0.50%Feb 2007 United Kingdom5.00%Apr 2008 Source: BT Financial Group
11 Source: BT Financial Group 30 June 2008 Global share market returns 1 year3 years (pa)5 years (pa) Global S&P 500 Index (US)-14.86%2.42%5.61% Nasdaq (US Tech.)-11.92%3.69%7.16% Nikkei 225 (Japan)-25.67%5.19%8.22% Hang Seng (Hong Kong)1.51%15.89%18.21% DAX (Germany)-19.84%11.85%14.79% CAC (France)-26.76%1.59%7.54% FTSE 100 (UK)-14.86%3.24%6.89% Australia S&P/ASX 200 Accum. Ind.-13.40%11.35%16.23% S&P/ASX Small Ordinaries-20.46%12.97%18.42% S&P/ASX 300 Listed Prop.-37.74%-2.44%5.21%
12 Short-term asset class performance Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$ 1-year rolling returns to 30 June 2008 (%) Best performing asset class for the year 2008200720062005200420032002200120001999199819971996199519941993 Australian cash 7.346.425.765.645.304.974.666.085.585.045.116.777.757.104.935.91 Australian bonds 4.423.993.417.792.339.786.217.426.173.2810.8816.769.4511.88-1.1313.93 Australian property -37.7426.3218.0918.4017.2112.1715.2413.9115.623.969.7429.213.709.088.1117.50 Australian shares -13.6729.2124.0226.0321.73-1.61-4.549.1118.4915.131.6327.1614.626.3915.548.66 International bonds 3.44-9.932.23-1.661.71-2.463.1414.5413.73-2.5726.199.13-9.6021.99-5.0726.42 International shares -21.267.7719.880.0619.37-18.53-23.50-6.0123.818.1742.1628.566.6613.760.4531.95
13 Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$ 1-year returns to 30 June 2008 (%) Short-term asset class performance (cont’d) 30 June 2007 30 June 2008 Australian bonds Listed property Australian shares Global bonds Global shares
14 Long-term asset class performance 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, Citigroup World Government Bond, Unhedged in A$ 30 June 2008 Australian bonds Listed property Australian shares Cash Global shares
15 Source: BT Financial Group. West Texas Intermediate oil price at 30 June 2008. Oil prices – US$ per barrel Oil prices continued to rise throughout June, hitting a new record high of over US$140 a barrel.
16 Summary The underlying strength of the Australian economy relative to its global counterparts looks set to continue in the near-term, though any significant deterioration in global growth will obviously have an adverse effect locally. Though the RBA left interest rates on hold following their July meeting, the Bank will no doubt be concerned by the high level of domestic inflation, which currently sits well outside its target band of 2-3%. The Australian dollar looks set to remain at high levels in the near-term and could well hit parity with the US dollar in the coming months. Gains in global share markets, including here in Australia, are likely to remain under pressure in the near-term but are likely to stay above their recent March lows.
17 This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time)