Aussie equites continue to defy gravity
The Australian equities market continues to defy expectations of a slowdown from last year’s record highs, rising 2.2 per cent in February.
The sector’s performance is due largely to ongoing improvement in commodity prices, according to funds manager Ausbil Dexia.
International equities followed Australian equities as the next best performing sector on the Ausbil Dexia table, while interest sensitive sectors, such as property, delivered lower or negative returns.
Chief Economist John Honan said the outlook for international commodity prices was positive, with a positive flow on impact to selected Australian equities.
“The risk of rising interest rates and a strong currency remains relevant,” he said.
The performance of domestic shares would add around 0.75 per cent to the performance of the average balanced superannuation fund for February, he said. This would take estimated one year returns to around 16 per cent.
Leading the charge for Australian equities last month was the materials sector, with growth of 8.1 per cent, boosted by the performance of BHP Billiton.
The resources sector also made a strong contribution, with the S&P/ASX 100 Resources delivering 10.4 per cent.
Higher short term and long bond yields are having a negative effect on the fixed interest market, Honan said.
In addition, rising interest rates are having a moderating impact on asset valuations in the listed property sector and financial stocks generally.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
