Global equity markets continued to drift higher in April 2017, led by growth and small cap stocks. The global economy has strengthened, reflecting the strongest and most synchronised growth since 2010 among developed and emerging markets. The International Monetary Fund (IMF) revised its 2017 growth forecast for the world economy to 3.5% from 3.4%. Headline inflation rates have increased while long-term bond yields are also higher than last year. These conditions have lowered expectations of additional monetary easing policies from major economies across the globe.
AUSTRALIAN EQUITIES
The broad Australian equity market grew modestly over April, as the S&P/ASX 300 Accumulation Index increased 1.0% for the month. Returns were positive across most of the market spectrum, with the best relative performer being the S&P/ASX mid 50 Accum, increasing 1.7% for the month. The worst performer was the S&P/ASX Small Ordinaries, decreasing by 0.3% over the month. The best performing sectors were Industrials (+4.1%) and IT (+3.5%). The weakest performing sectors were Telecom Services (-9.5%) and Consumer Staples (-2.5%). The largest positive contributors to the return of the index were CSL, ANZ and CBA, with absolute returns of 5.9%, 3.4% and 1.7% respectively. In contrast, the most significant detractors from performance were Telstra, Wesfarmers and Fortescue Metals with absolute returns of -8.9%, -4.3% and -14.4% respectively.
GLOBAL EQUITIES
The broad MSCI World ex Australia (NR) Index was up 1.3% in hedged terms and 3.6% in unhedged terms over the month, as the Australian dollar depreciated against the major currencies. The strongest performing sectors were Consumer Discretionary (+4.9%) and Industrials (+4.9%), while Energy (-0.3%) and Telecommunication Services (+0.6%) were the worst performers. In Australian dollar terms, the Global Small Cap sector increased by 4.1% while Emerging Markets increased 4.2% in unhedged Australian dollar terms. Over April, the NASDAQ returned 2.3%, the S&P 500 Composite Index rose by 1.0% and the Dow Jones Industrial Average increased by 1.4%, all in US dollar terms. Major European equity markets also experienced mostly positive returns as the CAC 40 (France) increased 3.1% and the DAX 30 (Germany) increased 1.0%.The FTSE 100 (UK) retreated by 1.3% however. In Asia, the Japanese TOPIX was up 1.3%, the Indian BSE 500 was up 2.7% and the Hang Seng Index was up 2.1%. The SSE Composite (China) decreased 2.1% over April.
CURRENCY MARKETS
The Australian dollar depreciated against all major currencies over April, finishing with a decreased Trade Weighted Index of 64.5 on 30 April 2017. The Australian dollar depreciated against the US dollar (-2.0%), the Pound Sterling (-5.5%), the Euro (-3.9%) and the Yen (-3.0%). On a trade-weighted basis, the local currency decreased 2.6% over the month.
