Investment markets at a glance
While it’s important to remember superannuation is a long-term investment, it’s interesting to keep up to date with what’s happening in investment markets over the shorter term. Here’s some news from our partner Russell Investments for the three months ended 30 June 2014…
Share markets up
Global share markets made reasonable gains, fuelled by encouraging ﬁrst-quarter US earnings results and increasing expectations the US Federal Reserve will keep interest rates lower for longer. Other positives were the European Central Bank’s decision to cut interest rates, as well as a pickup in global manufacturing activity. However, there were concerns about the speed of the euro-zone’s recovery and the increasing geopolitical uncertainty in the Ukraine and Iraq.
Australian shares advanced over the quarter, beneﬁting from expectations that domestic interest rates would remain steady. The Reserve Bank kept interest rates at a historically low 2.5% throughout the period. Other contributors were the increase in merger and acquisition activity, as well as some encouraging domestic economic data.
A surge in exports and surprisingly strong household spending saw the Australian economy expand in ﬁrst quarter 2014, with gross domestic product jumping 1.1%. On an annual basis, the local economy grew 3.5%, well above the 3.2% most economists had predicted.
Returns for share markets and other risk assets this year are expected to be more modest than in 2013, with continuing high volatility. Encouragingly, economic growth among the US, Europe and Japan is likely to be synchronised for the ﬁrst time since 2010.
The Australian economy is relatively well placed compared to many of its global counterparts. However domestic growth is expected to remain below trend this year, as mining investment continues to decline and non-mining sectors struggle to pick up the slack.