Australian Cash & Fixed Interest — Review
Short-term interest rates have increased modestly, and the 90-day bank bill yield is now just over 0.3%, up 0.25% this year. Long-term interest rates have risen more significantly, and the 10-year Commonwealth bond yield is now just over 3%, a 1.4% increase for the year. The Aussie dollar has appreciated year to date and is up 4.6% in overall value. On its headline cross rate against the U.S. dollar it is up 2.8% to 74.6 U.S. cents.
Australian & International Property — Review
The A-REITs have been one of the weaker ASX sectors this year to date. The S&P/ASX200 A-REITs Index is down by 9.0% in capital value and by 8.4% including dividends, well adrift of the wider share market’s 1.1% capital gain and 2.6% total return.
Overseas REITs have broadly tracked the wider global share market, picking up in March after the late February selloff on news of the Ukraine invasion, but drifting down again in April. For the year to date the FTSE EPRA/NAREIT Global Index in U.S. dollars including dividends returned a loss of 4.3%, outperforming the 8.0% loss for the MSCI World Index.
Australasian Equities — Review
Australian shares have bucked the global bear market and are modestly ahead for the year. The S&P/ASX 200 Index has made a small capital gain of 1.1% and delivered a total return including dividends of 2.6%. The booming resources sector has been an important contributor: The S&P/ASX 300 Index of metals and mining is up 17.4%, and the heavy weighting in the benchmark index of the banks has also helped, as the financials ex the A-REITs are up by 4.0%. At the weaker end, the IT sector is down 17.5% and consumer discretionary stocks are down 14.5%.
International Fixed Interest — Review
Global bond yields have continued to grind higher, and bond investors are suffering substantial capital losses. For the year to date, the Bloomberg Global Aggregate in U.S. dollars has returned an overall loss of 9.2%. The pain has been widely distributed across subsectors, with global government bonds down by 9.5%, global corporate bonds down by 7.9%, “high yield” (low credit quality) debt down by 7.8%, and emerging-markets debt down by 11.3%. Investors aiming for some reasonable level of yield by going out the long end of the yield curve have been especially badly hit. The rise in the 30-year U.S. Treasury yield from 1.9% at the start of the year to just shy of 3% now has meant that the Long Treasury Index has returned a year-to-date loss of 17.7%.
International Equities — Review
World shares started to recover in March after the initial shock of the invasion of Ukraine, but have relapsed since the end of March. This year to date the MSCI World Index of developed economy share markets is now down by 8.6% in U.S. dollars. Only the U.K. is ahead, with the FTSE100 Index up 3.1% thanks to the London listings of some big beneficiaries of global inflation (notably oil and gas producers, up 30.4% for the year to date, and miners, up 30.2%). Elsewhere, in the U.S. the S&P 500 is down 7.9% and the Nasdaq down 14.8%, in Europe Germany’s DAX is down 10.8% and France’s CAC down 7.9%, while in Japan the Nikkei is down 6.9% in yen terms, with the loss compounded by a depreciating yen (down 9.4% against the U.S. dollar year to date).
Emerging markets are down 10.2% in U.S. dollars. The only bright spot has been commodity beneficiary Brazil, where the Bovespa Index is up 32.1% and the MSCI Brazil up 30.2%. In U.S. dollars, Indian shares are down a little (MSCI India down 2.8%), and Chinese shares have been weak (MSCI China down 16.2%). Unsurprisingly, Russian shares have tumbled: The FTSE Russia is down 27.7% and the RTS Index is down 42.0%.
Source: Morningstar Australasia Pty Ltd
Performance periods unless otherwise stated generally refer to periods ended April, 18, 2022.
