Monthly Commentary - MARCH 2019monthly

Developments in the global economy

Inflation pressures globally have eased substantially in contrast to concerns held early in 2018. This is a mixed blessing as it provides some cover for the US Federal Reserve with respect to putting further rate hikes on hold but likely reflects the slackening pace of growth. While the global growth pulse has softened it is best described as lacklustre rather than calamitous.


The National Accounts released early in the month showed the Australian economy grew by 0.2% in the December quarter to be 2.3% larger than a year earlier. Strong growth early in 2018 has given way to two consecutive quarters of relatively weak growth. More recent releases continue this trend of lacklustre economic data. Households remain reluctant spenders with retail sales increasing by a seasonally adjusted 0.1% in January following a 0.4% decline in December. The Westpac/Melbourne Institute consumer sentiment survey reinforced this weakness with the index falling 4.8% to 98.8 in March from 103.8 a month earlier. A reading below 100 means that pessimists outweigh optimists. Consumer weakness is slightly at odds with labour force data which saw the unemployment rate fall to 4.9% in February from 5.0% a month earlier but the rise of part-time work and subdued wages growth helps explain the divergence. There was some better news in the construction sector with building approvals increasing by a seasonally adjusted 2.5% in January, but the trend remains resolutely negative with approvals 28.6% lower than year ago levels.


US labour market statistics have been volatile recently and few are reading too much into the 20,000 increase in non-farm payrolls in February. This follows an upward revision to a 311,000 gain in January. Further muddying the water was the fall in the unemployment rate to 3.8% in February from 4.0% a month earlier. US inflation has been contained over the past six months providing the US Federal Reserve with some breathing room and justification for halting the previous rate rise trajectory. Core inflation increased by 0.1% in February to be 2.1% above year ago levels. Core inflation had accelerated to 2.4% in mid-2018 but has been at or below 2.2% since then.


Recent weaker than expected economic data has prompted the European Central Bank (ECB) to provide revised guidance on the likely path of monetary policy. At its March meeting, the ECB stated that it now expects key interest rates to remain unchanged at least until the end of 2019. Consistent with this, they cut their GDP growth forecast for 2019 to 1.1% from 1.7% previously and to 1.6% from 1.7% for 2020. Inflation is also expected to be significantly lower at 1.2% for 2019. Other economic data reinforced the weaker outlook with employment growth at 1.3% and the unemployment rate stuck at 7.8%. Consumer and business confidence remained at subdued levels.


Chinese inflation increased by 1.0% in February following a 0.5% rise in January. However, these figures give a misleading view of inflation pressures with consumer prices only increasing by 1.5% year-on-year. Producer prices are even more subdued, falling 0.1% in February to be 0.1% above year ago levels.


The tone of recent Japanese data remains soft. The Tankan survey of sentiment for large manufacturers fell to 12 from 19, erasing all the gains seen over the past 12 months. In its Statement on Monetary Policy, the Bank of Japan provided a relatively sanguine view of the economy suggesting the economy was ‘expanding moderately, with a virtuous cycle from income to spending operating’ but noted that a slowdown was evident in overseas economies which had impacted Japanese exports.

Developments in financial markets

Bond yields in the US and Australia moved substantially lower in March, prompting fears that this was a harbinger of a significant growth slowdown, if not an outright recession. Despite this, equities managed to build on February’s strong returns. An easing of trade tensions and continued positive guidance from the US Federal Reserve helped sentiment.

Australian shares

The S&P/ASX 200 Accumulation Index returned 0.7% in March following a 6.0% increase in February. Over the past 12 months, Australian equities have returned 12.1%, with the sharp decline at the end of 2018 now seemingly a distant memory. Resources again outperformed returning 2.0% in the month or 28.2% over the past 12 months. However, small caps did not share in the positive trend, retreating 0.1% in March. The best performing sectors were AREITS (+9.8%), Telecommunications (+4.0%) and Consumer Staples (+3.9%) which reversed the previous month’s decline. The worst performing sectors were Energy (-4.1%), Financials (-2.7%) and Utilities (+1.3%). At the stock level, the best performing stocks in the ASX100 in March were Fortescue Metals (+17.3%), Charter Hall (+16.7%) and JB Hi-Fi (+15.0%). The worst performing stocks included AMP (-11.0%), Soul Pattison (-10.6%) and Whitehaven Coal (-8.0%).

International shares

The MSCI World ex Australia Index (A$) returned 1.5% in March following February’s bumper 5.6% increase. With currency returns included international shares have marginally outperformed Australian shares over the past 12 months with a return of 12.3%. Emerging markets posted a similar return to developed markets in March but over the past 12 months have returned -1.9%, significantly below developed markets.

Over the month, the S&P 500 returned 1.9% building on the 3.0% seen in February. Easing concerns around US/China trade helped sentiment while ongoing growth uncertainties weighed on sentiment. Despite ongoing Brexit uncertainty, the UK FTSE 100 index returned 3.3% in March. MSCI Europe was negative overall but the major markets of Germany (+0.1%) France (+2.1%) and Italy (+3.0%) posted positive returns, albeit Germany was only marginally positive. The Shanghai Composite posted another strong 6.1% increase following February’s massive 13.8% increase.

Fixed Interest and Cash

US bond yields fell sharply in March with the US 10-year government bond ending the month at 2.41%, having earlier moved just below the 2.4% level. The move was prompted by increasing concerns about the US growth trajectory and lower than expected inflation. Australian yields also moved lower ending the month at 1.8%. As a result, returns to fixed interest were boosted with the Bloomberg AusBond Composite Bond Index posting a 1.8% return in the month, while global fixed interest as measured by the Bloomberg Barclays Global Aggregate Bond Index hedged in $A lagged slightly and returned 1.7% in March.


AREITS were boosted by lower bond yields and improved sentiment, returning a strong 6.2% in March and significantly outperforming the broader market. Australian property trusts made up five of the top ten performing stocks in March. Global REITs also benefited from lower bond yields and posted a 3.9% return but were unable to match the stellar returns of their Australian counterparts.

Currency and commodities

The Australian dollar was largely unchanged through March ending the month at US$0.7096 from US$0.7094 a month earlier. This was despite significant changes in bond yields during the month. Muted changes in commodity prices may have played a part in the currency’s lack of movement. Iron ore prices increased by 1.8%, ending the month at US$86.5/mt while the gold price fell 1.8% to US$1295.4. Other metals were mixed with zinc increasing by 6.6% while lead fell 6.1%. Other price changes were less extreme with copper (-1.0%), tin (-1.4%) and nickel (-0.6%) all falling by low single digits. West Texas Intermediate (WTI) oil prices increased a further 5.1% following February’s 6.0% rise.

Key market returns at 31 March 2019

Monthly Commentary - MARCH 2019

If you have any questions, please contact us on This email address is being protected from spambots. You need JavaScript enabled to view it.

Fortress Financial Solutions founder Chris Black is an award-winning financial planner based in Toowoomba who specialises in superannuation, investing, business succession, cash flow management, retirement planning and personal insurances (including life insurance, income protection, total permanent disability and trauma insurance).

disclaimer PNGFortress Financial Solutions Pty Ltd is a Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate in light of your objectives, financial situation and needs.

If you have any questions, contact the Applied Research & Solutions team by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it..

This publication has been prepared by Westpac Banking Corporation ABN 33 007 457 141 AFSL 233714 (Westpac) and is current as at 5 April 2019. This document has been prepared for use only by advisers and clients of BT Advice, Magnitude Group Pty Ltd (trading as Magnitude Financial Planning) and Securitor Financial Group Ltd (“authorised users”). BT Financial Group is the wealth management arm of the Westpac group of companies (“Westpac Group”).This publication does not constitute financial product advice, investment advice or recommendations of any kind. This publication has been prepared without taking account of any person’s objectives, financial situation or needs, and so the reader should consider its appropriateness having regard to these factors before acting on it. This publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information in this publication may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. While this material is published with necessary permission, no company in the Westpac Group accepts responsibility for the accuracy or completeness of, or endorses this material. Except where contrary to law, we intend by this notice to exclude liability for this material. It is not the intention of Westpac or any other member of the Westpac Group that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. Past performance is not a reliable indicator of future performance.

Financial Service Guide (FSG): The Westpac FSG contains important information that applies to the research services provided by Westpac in this report. You should read the Westpac FSG which is available on Westpac’s website at under “Westpac FSG”. Alternatively, you can ask your financial adviser for a copy.


Are you ready to take control of your financial future

Toowoomba Financial Planners
50 Most Influentional Advisers
  • F: (07) 4641 7497
  • This email address is being protected from spambots. You need JavaScript enabled to view it.
  • 15 Isabel Street,
    Toowoomba QLD 4350
  • ABN: 32 164 822 333
The information and any advice on this website does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement.

Any outlooks or projections on this website rely on assumptions as stated, however actual results may differ materially from these projections. Past performance is not a reliable indicator of future performance. This website may contain material provided by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. To the maximum extent permitted by law: no guarantee, representation or warranty is given that the information or advice in this website is complete, accurate, up-to-date or fit for any purpose.

Copyright © 2019 Gallagher Benefit Services Pty Ltd ABN 49 611 343 803 | AFSL No. 488001, All rights reserved.
© Copyright 2018