Developments in the Australian and Global Financial Markets
Written and accurate as at: Nov 21, 2019 Current Stats & Facts
Australian shares
The Australian sharemarket had a difficult start to the month amid global growth concerns, with $74.1Bn wiped from the boards across the first two days of October. Gains later in the month weren’t able to surpass the early losses. The highest positive contributors on the were Healthcare (+7.27%), Industrials (+2.89%), Real Estate (+1.77%) and Utilities (1.23%). The largest detractors for the month were Info Tech (-3.19%), Financials (-2.88%) and Consumer Staples (-2.24%).
International shares
The broader global sharemarket (Unhedged to the Australian dollar) rose slightly over October. The S&P 500 hit record highs over the month, backed by stronger than expected Q3 earnings and positive sentiment surrounding US-China trade wars. The S&P 500 Total Return index closed the month up 2.17%, while the Nasdaq Total return closed the month up 3.71%.
European stocks also rallied over the month on positive trade news, with the Trump administration possibly delaying fresh tariffs that were supposed to affect EU carmakers. The STOXX Europe 600 Total Return rose 0.92% over October, while the DAX soared 3.53% over the month. The FTSE however fell -2.16% due to Brexit uncertainty.
The Shanghai composite slipped in the last week of the month after reports that factory activity had contracted once again, finishing the month only 0.82% higher. The Bank of Japan announced that it would keep monetary policy steady, with the Nikkei 225 Total Return finishing up 5.39% for the month. The Korean KOSPI finished October up 0.99% while the Hang Seng finished 3.12% higher.
Fixed interest
The Bloomberg AusBond Bank Bill Index rose 0.08% over the month. Australian 3yr government bond yields initially fell from 0.70% to 0.64% at the start of October in response to the RBA rate cut, and then fell further to 0.59% - a record low.
The 3 year yield spiked at 0.80% in the month post Fed policy cut announcement, but fell to finish the month at 0.77%. 2-year US Treasury yields fell in early October on expectations that the Fed would cut rates at the end of the month, falling 1.498%. The 2 year yield jumped 6 basis points to 1.67% in response to the Fed rate cut announcement on the 31st, then fell back to finish the month at 1.64%.
Euro zone bond yields rose in late October following upbeat noises from U.S. China trade talks and a slightly stronger tone to U.S. economic data.
Currencies
The AUD/USD reached one month highs of 0.6830 in mid-October amidst an increase in risk appetites resulting from positive trade talks. The AUD/USD finished the month even higher at 0.6894, up 2.13%.
The dollar also rose against the British Pound and the Euro as the EU and Boris Johnson announced the additional Brexit delay. GBP rose late October on the fading prospect of a no-deal GBP rose late October on the fading prospect of a no-deal Brexit.
Commodities
The Bloomberg Commodity Index rose 1.87% over the month of October. Generic Brent Crude Oil fell -0.90% over the month, finishing at a price of 60.23. Gold rose 2.75%, finishing at 1512.99 US$/oz. Iron Ore fell the greatest over the month, a total of -8.88%, closing at 84.72.