More good news in July as equities markets continue to rally. Developed equities markets continued to rally in July amidst an improving global economic outlook and strong corporate earnings. The Australian share market gained 2.7%, while international shares gained 3.8% in unhedged $A terms. Coming off low valuations, the European markets delivered strong performance, while the US S&P 500 narrowly lagged the global benchmark. Cyclical stocks dominated over the month, with IT, Materials and Consumer Discretionary the key beneficiaries. Energy stocks also rallied strongly thanks to higher oil and commodity prices.
The Australian share market reaches new highs. The Australian share market reached new highs in July, and has returned 29% over the year to 31 July 2005. Similar to global equities markets, IT, Materials and Consumer Discretionary stocks outperformed the broader market.
US bond yields rise (finally). Bond yields finally rose in July, with US Treasuries experiencing their biggest sell-off since November in response to strong economic data releases and the likelihood of further interest rate rises in the US. The Lehman Global Aggregate Index ($A Hedged) returned –0.4% in July.
The $A maintains its volatile trading patterns. The $A maintained its volatile trading patterns in July, ultimately giving back most the gains it made against the $US in June. Since 1 January 2005, the $A has fallen by 3% against the $US, but has risen by 1.4% in trade-weighted terms.
Another strong month for emerging markets. The MSCI Emerging Markets Index gained 7.3% in $A terms in July and 34.9% over the past 12 months. The sector has recently attracted massive new funds inflow given its higher alpha potential, better valuations and improving fundamentals, but remains more volatile than developed markets.
17th-August-2005 | 