Australian Economy – In what some saw as a surprise move, the RBA decided to leave rates on hold for another month. This was somewhat justified by a couple of good numbers released through the month including a drop in the unemployment rate back to 5.1% and a tick up in consumer confidence and business sentiment. Though politics garnered more of the media than most would like, luckily, there are much bigger influences on the Australian economy than who we have as our PM.
Global Economy – It will come as no big shock that European authorities have forged some sort of deal to keep Greece running for now and this has helped to reduce the threat of imminent panic. Another EUR530 billion in cheap funding to banks has also added to the uneasy calm that has permeated through global markets. The US has continued to impress on most fronts with the economy showing more and more signs of steady growth, but the rising oil price is providing a dampener to perhaps some better global growth.
Investment Markets – 2012 continues to give back to investors with equity markets providing good traction. In Australia the share market pushed ahead a further 6% in February, with US and Europe up around 4% and China and Hong Kong markets rising around 6%. Though we are seeing some good steady stock market gains at the moment, the relatively light level of volumes traded is a concern for those hoping for an extended rally.
Outlook – The big risks seemed to lie firmly in Europe, with the current calm perhaps a precursor to a future storm. There is hope that there will be enough demand for upcoming debt auctions from Portugal, Italy and Spain, but there is potential for some short-term market jitters. Global resolve for an end to the crisis may be enough to put investors at ease, but don't underestimate the spanners that could be thrown into the works by disenchanted citizens, elections and change of Governments.
S&P/ASX 200 – 12 months to 29 February 2012
Source: Core Equity Services