Shares rally as the Federal Reserve sees the end in sight for rate rises, shifts focus to growth.

The Federal Reserve's late June announcement stressed the need to manage growth in the next phase, as it had begun to moderate from the high of the first quarter when it hit 5.6% (annualised). Previously US growth was robust enough for the Federal Reserve to focus solely on managing inflation through rate rises. The news sent shares upwards. Market commentators had expected the 0.25% interest rate hike in the US Federal funds rate at the end of June. Most heaved a sigh of relief when the accompanying Federal Reserve Statement suggested slowing growth would limit inflation going forward.

Australian property securities have their best month since inception of the benchmark.

Property trusts outperformed as inflation fears dominated most of the month. Property trusts are viewed by investors as an inflation hedge, offer a high headline yield, and are more defensive than other sectors.

Energy & Materials sectors deliver more moderate returns.

Materials (+0.5%) and Energy (+2.1%) which have been the primary drivers of the market this year (+50.3% and +34.7%) fell back as commodity prices weakened and British Petroleum suggested that spare oil capacity would double by 2010.

Emerging markets under-perform developed markets.

The MSCI EM in $A (with div reinvested) returned 1.2%. The flight away from emerging markets during the quarter (-8.2%) saw the exit of some global share managers with a small exposure to the sector providing good buying opportunities for dedicated emerging market managers.