Presentation on theme: "BT Monthly Markets Chart Pack – November 2008 An overview of movements in global financial markets."— Presentation transcript:
BT Monthly Markets Chart Pack – November 2008 An overview of movements in global financial markets
2 Markets continued to fall in November … Global share markets continued their slide in November amid weakening economic data and the realisation that several of the world’s major economies had slipped into recession. In the US, the benchmark S&P 500 Index fell 7.5%, while bourses in Europe (-6.2%), the UK (-2.0%) and Japan (-0.8%) were also lower. The Australian share market fell for the third month in a row in November, with the S&P/ASX 200 Accumulation Index closing down 6.2%. Again, the fall came mostly on the back of a weak lead from the US and falling commodity prices. So far this year, the Australian share market is down 38.3%, compared to a gain of 16.1% in 2007.
3 Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$. Source: BT Financial Group, MSCI Impact of major market events on global shares since 1986 …but the long-term trend is still positive, despite some major market events Jan 91 Gulf War Feb 94 Bond Market Crash Aug 97 Asian Currency Crisis Jul 98 Russian Bond Crisis Jul 01 Tech Wreck Sep 01 Attack on Twin Towers Jun 07 US Sub-prime Crisis Oct 87 Wall Street crash Nov 89 Fall of the Berlin Wall Mar 03 Troops enter Iraq
4 Key Australian economic news – November The Reserve Bank of Australia (RBA) cut interest rates by a further 1.00% (to 4.25%) at its early December meeting. The RBA has now cut the official cash rate by 3.00% since September last year. The unemployment rate remained steady at 4.3% in October, with the economy adding 34,300 new jobs during the month. The market had anticipated a loss of 10,000 jobs, so the outcome was much better than expected. The Westpac/Melbourne Institute’s consumer sentiment survey recorded a jump of 4.3% in November. The improvement in the month coincided with a further sharp reduction in the RBA cash rate (-0.75%) at the beginning of November. Retail sales were up just 0.1% in the September quarter to be 1.0% higher over the year. Source: BT Financial Group
5 The Australian dollar falls further in November The Australian dollar (A$) fell again against the US dollar (US$) in November, though not by nearly as much as last month. The local currency lost 1.9% to close at US$0.6549 cents thanks largely to weaker commodity prices and a gloomy economic outlook. It’s likely now that we’ll see the A$ trade around current levels as we head into 2009, particularly if commodity prices remain under pressure. At the end of November: A$1 boughtUS$0.6549-1.9% €0.5162-1.6% ¥62.51-4.9% Source: BT Financial Group
6 Currency markets – A$ per US dollar Source: BT Financial Group. Figures at 30 November 2008. The Australian dollar versus the US dollar…
7 Currency markets – A$ per Euro the Euro… Source: BT Financial Group. Figures at 30 November 2008.
8 and the Yen Currency markets – A$ per Yen Source: BT Financial Group. Figures at 30 November 2008.
9 Official world interest rate movements – November In Australia, the Reserve Bank cut the official cash rate a further 1.00% (to 4.25%) at its early December meeting. Elsewhere, the European Central Bank, the Bank of England and the Bank of Japan (late October) also cut their benchmark interest rates. The US Federal Reserve didn’t meet in November. Current rateLast moved Direction of last move Australia4.25%Dec 2008 US1.00%Oct 2008 Europe (ECB)3.25%Nov 2008 Japan0.30%Oct 2008 United Kingdom3.00%Nov 2008 Source: BT Financial Group
10 Source: BT Financial Group 30 November 2008 Global share market returns 1 year3 years (pa)5 years (pa) Global S&P 500 Index (US)-39.49%-10.48%-3.27% Nasdaq (US Tech.)-42.29%-11.73%-4.77% Nikkei 225 (Japan)-45.71%-16.97%-3.36% Hang Seng (Hong Kong)-51.51%-2.40%2.43% DAX (Germany)-40.67%-3.48%4.51% CAC (France)-42.46%-10.61%-0.97% FTSE 100 (UK)-33.34%-7.53%-0.25% Australia S&P/ASX 200 Accum. Ind.-39.95%-2.83%7.75% S&P/ASX Small Ordinaries-56.11%-10.52%2.03% S&P/ASX 300 Listed Prop.-53.44%-13.60%-1.18%
11 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, Barclays Capital Global Aggregate Bond Index hedged to $A 1-year rolling returns to 30 November 2008 (%) Best performing asset class for the year 2008200720062005200420032002200120001999199819971996199519941993 Australian cash 7.796.665.965.725.614.864.715.426.184.975.155.797.627.975.205.48 Australian bonds 13.353.324.414.818.863.545.508.359.38-0.2810.3011.2812.4019.91-5.2116.83 Australian property -53.445.1931.6712.5429.856.9712.4518.4515.33-5.0520.4516.9418.4111.74-0.9823.65 Australian shares -40.4523.7523.8322.5028.699.02-4.705.5014.0315.2915.027.9114.7519.93-2.6739.95 International bonds 6.885.845.836.619.267.358.8710.298.080.8210.919.1111.4819.46-1.7713.93 International shares -22.440.0112.5616.409.15-7.78-21.75-15.3411.6620.0530.7034.448.3622.45-6.4021.62
12 Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A 1-year returns to 30 November 2008 (%) Short-term asset class performance (cont’d) 30 November 2007 30 November 2008 Australian bonds Listed property Australian shares Global bonds Global shares
13 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 30 November 2008 Australian bonds Listed property Australian shares Cash Global shares
14 Source: BT Financial Group. West Texas Intermediate oil price at 30 November 2008. Oil prices – US$ per barrel Oil prices fell again as demand dried up and the global economy slowed
15 Summary The Australian economy has held up pretty well compared to some of its global counterparts in 2008, though we are now seeing evidence that the global economic slowdown is having a real and negative effect locally. The RBA’s decision to lower the official cash rate again in December highlights the Bank’s concern over the direction of the Australian economy and we expect another rate cut when meetings resume in February next year. With commodity prices likely to remain under pressure in the near-term and the RBA likely to cut interest rates again in early 2009, we think the Australian dollar will continue to trade around current levels into next year. 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.
16 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)