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Share market update March 2017

  • The Australian share market continues to climb, as at 30th March the All Ords closing  at 5931, up 3.1% from 5751 on March 1st. (The market grew 2.3% in February).
  • The Reserve Bank of Australia Board left the official cash rate on hold at 1.5% at their March meeting.
  • Q4 2016 GDP results were released in February showing the Australian economy growing at an annual rate of 2.4%, up from 1.9% in Q3 2016.
  • News flow in February continued to be dominated by two key themes in the US: the expected policy decisions and legislative timetable of President Trump, and the timing of the next move higher in interest rates by the US Federal Reserve. President Trump’s State of the Union address on 28 February didn’t include any specific details on tax reform. Instead, the speech revived campaign themes: replacement of Obamacare, a tax overhaul including lower corporate taxes and cuts for the middle class, $US1 trillion infrastructure investment and a sharp increase in defence spending.
  • In European politics the focus remained on the French Presidential elections, with polling over the month indicating a tightening race between Marine Le Pen and the centrist candidate Emmanuel Macron.
  • Economic news in China over the month focussed on continued signs of growing inflation pressures in the economy.
  • The Australian dollar fell slightly from 0.77c to 0.76c (US).
  • Commodity prices were mixed over February, as oil stabilised and an improving outlook for China drove some commodities higher. Oil prices rose 2.3% to $US54.0 a barrel, as did iron ore (up 9.5% to US$91.3 a tonne) and gold (up 3.1% to US$1,248 an ounce).
  • Global developed equity markets continued to perform well over February with better economic data and the expectation of tax and regulatory reform. Global equities rose 2.6% in USD terms (+1.1% in AUD terms), while the US equity market reached all-time highs, rising a further 3.7%.
  • Emerging market equities continued to recover their post US election losses rising 3.0% due to stability in the USD along with softer rhetoric around US trade policy and a better global growth outlook.

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