Market Highlights - A look back at February 2013

Australian EconomySomewhat mixed signals on the domestic front in February. Positives were seen on the confidence front with business sentiment, consumer sentiment and house prices all up. Signs of weakness were evident with employment remaining lacklustre and the manufacturing sector continuing its slump.

Global Economy – Some weaker numbers out of China was offset by mainly stronger news out of the US. The impending sequestration in the US hasn't been too much of a concern for the market, as most believe that something will be done to avert any major loss of employment.  The elections in Italy were a major focus for the month, with a hung parliament result seen as a poor outcome for Europe and goals of renewed global stability.

Investment Markets – Europe was the poor performer in February retreating around 2.5%, mainly on the back of Italian election jitters.  The US, Australia and Japan all saw returns of 2.5%- 5%, while China was largely flat for the month.

Outlook – Though volatility is starting to pick up again, the success of global "can kicking" is starting to be seen with strong support beneath short-term falls and more reports of record highs.  There is still a fear that the US will have a look and see what happens if it doesn't fulfill its obligation to continue kicking the can, but this is somewhat unlikely with the GOP and Democrats both looking to concede some areas (removal of tax loopholes and medicare changes respectively).

S&P/ASX 200 – 12 months to 28 February 2013

Source: Core Equity Services

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