Market update: Spring 2016

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Market update - Spring 2016

Cash

Cash rates keep falling in Australia, with another interest rate cut in May. It seems likely that this will not be the last rate cut with the RBA widely expected to cut again possibly in August.

Bonds

Fixed interest markets recorded strong returns for the year. The economic environment remains supportive of bonds, with modest levels of economic growth and low inflation. Fixed interest yields around the world are very low, in some cases negative, and it would seem likely that future returns will be more muted.

Australian shares

Australian shares end the financial year fairly flat but certainly experienced some volatility over the prior 12 months. A strong rally in the last quarter helped Australian shares recover after the falls experienced in the first few months of the year.

For the full year market returns have been fairly flat.

Valuations in the share market are not overly demanding, but the economy and share market face some headwinds from a slowdown in the Chinese economy, Australia’s largest trading partner.

International shares

International shares end the financial fairly flat but certainly experienced some volatility over the prior 12 months. A strong rally in the last quarter helped international shares recover up after the falls experienced in the first few months of the year. The US share market was one of the better performers,

European and some Asian share markets experienced negative returns. Emerging markets struggled but look very attractively valued.

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