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Market Update – Feb 2017

  • The Australian Share Market (All Ords) reached a 1 year and 10 month high on 16th February.
  • The Reserve Bank of Australia Board did not meet in January. The RBA then maintained interest rates at 1.5% in February.
  • The December terms of trade data showed an all-time record surplus of $3.5 billion, led by a 5% increase in exports, driven largely by increasing prices for coal and iron ore.
  • At the first meeting for 2017, the US Federal Reserve left interest rates unchanged at 0.5%-0.75%.
  • The biggest event for global financial markets in January – and potentially the biggest event for the year, was the inauguration of Donald Trump as the 45th President of the United States. The next major political event will be President Trump’s speech to a joint sitting of congress scheduled for 28 February, which is traditionally used by new Presidents to lay out policy priorities for the years ahead.
  • Over the month UK Prime Minister Theresa May offered more insight into what eventual BREXIT will look like. At her highly anticipated 17 January speech, she confirmed that the UK will take back control of immigration and will leave the single market but is hopeful that a free trade agreement can be reached with the EU.
  • Most commodity prices remained well supported in January and the market continues to price in expectations of rising infrastructure spending. Oil prices fell 1.7% to $US52.8 a barrel but iron ore rose 5.7% to US$83.3 a tonne. Gold prices also rallied 5.0% to US$1,211 an ounce.
  • The Australian dollar was stronger off the back of rising commodity prices over the month. The AUD ended the month up 5.0% against the USD at $US0.76, as well as the Pound (+3.1%), the Euro (+2.6%) and the Yen (+1.6%).
  • Global developed equity markets mostly consolidated their post-election gains over January, with some give-back late in the month. Global equities rose 2.4% in USD terms but down 2.4% in AUD terms due to the strong Aussie dollar.
  • Emerging market equities recovered last month’s losses, rising 5.4% off the back of a weaker USD, higher commodity prices and stability in yields.

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