Feb 03, 2020 / News

Financial Planning

Market Update (Summer 19/20)

Over November, the S&P 500 returned 3.4%, delivering the best monthly performance since June, and being up 25.5% for the year. Technology was the best performing sector, gaining 5.2% and helping drive the NASDAQ up 4.5%.

Domestically, Australian shares closed higher, supported by growing speculation after RBA Governor Lowe made a speech on unconventional monetary policies during which he stated that quantitative easing may be considered at “a cash rate of 0.25%, but not before that”, though he did not expect this in the “near future”. Rates were kept on hold in November, following three cuts to the cash rate this year to 0.75%, however concerns remain over the lack of downward movement in the unemployment rate.

In the UK, even with Jeremy Corbyn’s announcements of a substantial spending spree of $158bn, including the bringing forward a net zero emissions target, and to renegotiate a new Brexit deal to support his party’s election hopes, failed to win over voters with landslide a win to the Boris Johnson led Conservative party.

The Bank of England’s Board decided to leave the cash rate unchanged at 0.75%. UK house prices rose 0.5% in November — the largest gain since July 2018. The reduced uncertainty over the election outcome and lower prospects of a “no deal” Brexit, is likely to bring some confidence back into the market. The first release of the third quarter UK GDP figure indicated the economy narrowly avoided a technical recession. Real GDP growth was 0.3% — the slowest annual rate in a decade.

Sweden’s central bank sold off bonds from emissions-intensive issuers including the oil-rich Canadian province of Alberta and parts of Australia. The European parliament declared a climate emergency, pressuring member states to pass more decisive legislation to curb emissions.

Data released by the Conference Board revealed US consumer confidence fell in November for the fourth month in a row, reading 125.5. The Trump Administration’s 16-month trade war is impacting American households who are pulling back on spending amid the global slowdown and resultant lowering of business sentiment. Despite this, US GDP increased at a 2.1% annualised rate, up from a 1.9% last month.

Asian shares were modestly lower towards the end of the month after President Trump signed a bill expressing support for human rights in Hong Kong, to which China reacted with indignation. China stated that they are striving to reach an initial trade agreement with the US on the basis of equality and mutual respect of each other’s core concerns. Completion of a phase one deal could slide into 2020, with Beijing asking for more extensive tariff rollbacks and Washington countering this with increased demands of its own. 

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EMFS was formed in 2001 originally to service the financial planning needs of the clients of Nexia Edwards Marshall, Chartered Accountants. In addition, we now service clients referred by other accounting firms, lawyers and clients who are not serviced by Nexia Edwards Marshall. We manage funds totalling about $250m on behalf of clients.

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