Market Information
Monthly Market & Sector Review
December 2011
The European debt crisis continued to dominate headlines in December. Volatile equity markets fell after the EU leaders summit disappointed and then recovered as the European Central Bank provided ‘cheap’ funding for European banks and improving economic data emerged from the US. Global concerns continued to provide strong ‘safe haven’ demand and positive returns for fixed interest. In NZ, the RBNZ left the OCR on hold at 2.5%, with uncertainty in global economic conditions expected to keep our central bank on the sideline until late 2012.
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November 2011
Markets continue to be at the political mercy of the Eurozone. After a promising recovery in October, risk aversion returned in November. Fixed interest portfolios had solid positive returns as uncertainty drove investors back in to the ‘safe haven’ assets. Late in the month optimism about decisive political action in Europe returned to markets and risk assets recovered some of the losses from earlier in the month
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October 2011
October saw another chapter in the volatile Europe saga. This month however, it was ‘risk on’. Signs of progress by politicians to address the regions debt problems gave investors comfort to return to ‘higher risk’ equity markets. Most equity markets saw positive returns, which have been a rare occurrence lately due to global volatility. For NZ, local data took a back seat to global issues, with the RBNZ staying on the sidelines and holding the Official Cash Rate at 2.5%
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September 2011
September was a topsy turvey month with sensitive markets once again reacting to every news story, ultimately resulting in ‘risk off’ or selling equities for the month. The European sovereign debt crisis continued to be the dominant concern for markets in September. Equities saw negative returns, although the weakening NZD helped turned this into a positive number for international equities when converted to NZD. Fixed interest benefitted from the selloff in equities, with interest rates going even lower in September
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August 2011
August was filled with headlines regarding the continuing softening of the US economy and expectation of stimulus from the White House and the Federal Reserve. Comments from political leaders surrounding debt issues in Europe ensured the volatility that has plagued markets in recent months continued. Equities, both local and international, were negative for the month, while fixed interest benefitted from risk aversion and ‘safe haven’ demand
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July 2011
July started off well for equities, as immediate concerns for Greek debt refinancing subsided and risk aversion fell. However political wrangling over raising the US debt ceiling and debt reduction policy then took centre stage. The drawn out negotiations adversely affected risk sentiment, causing volatility in financial markets and weakening the US dollar. The possibility of a US default and losing its AAA credit rating became a prospect. The NZ economy continued to build on its recovery, with the RBNZ now likely to lift the Official Cash Rate in the next couple of months if global conditions permit
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June 2011
Equities were weaker in June as concerns of a Greek sovereign debt default loomed. This uncertainty led to risk aversion (selling equities) until Greek austerity measures were approved late in the month. Global growth concerns continue to simmer in the background, contributing to weakness in equities and positive returns for fixed interest. NZ Equity markets couldn’t fight the global turmoil as they have in recent months, also following global markets lower
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May 2011
May saw a change in the global economic outlook as data across the globe confirmed a slowdown in growth. This change in perception caused risk aversion to dominate sentiment, pushing equity markets lower and causing bond values to rise. Globally equities were down, whilst locally equity returns were positive. NZ equities were boosted by the improving tone to NZ economic data.
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April 2011
International equities had a positive month, however the weak US dollar resulted in negative returns in NZ dollars. NZ Fixed Interest benefitted from strong demand for NZ government bonds, leading to positive returns for the month. The RBNZ left the Official Cash Rate on hold at 2.5% and plans to keep the emergency measure in place until the Christchurch rebuild begins.
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March 2011
Natural disasters and political unrest led to volatility in markets in March. In Japan, the earthquake, tsunami and nuclear crisis were devastating. Political unrest continued in Libya, providing no relief for oil prices. Locally markets focused on the cut of the Official Cash Rate, an ‘insurance measure’ from the RBNZ to help with the impact of the Christchurch earthquake on the NZ economy.
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February2011
February was a devastating month for New Zealand with the Christchurch earthquake. The damage in terms of human and economic cost is immense. Globally, markets focused on the political turmoil in Libya and the economic recovery in the US.
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January 2011
The new year started with confidence in January, with all markets showing positive returns except Australia (affected by the tragic floods in Queensland). A strong corporate reporting season in the US and easing European Sovereign debt concerns assisted equity markets. Egypt’s turmoil came into the spotlight at month end leading to risk aversion in the final days of the month.
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December 2010
Appetite for risk returned in December benefitting equities globally. Improving US data and a positive outlook for 2011 provided the momentum. Fixed Interest was relatively unchanged, with short term rates lower, and long term rates higher, producing a neutral result for December.
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November 2010
November was relatively neutral for both equities and fixed interest. The month started strongly as the US released Quantitative Easing II (QE), European sovereign debt then came back to the headlines with Ireland requiring a bailout. Ireland, coupled with tension in North Korea and tightening monetary policy in China made for a jittery November. Any gains made early in the month after QE was announced, were erased by concerns over global issues.
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