Market Highlights - A look back at February 2014

Australian EconomySomewhat mixed data with Australia's trade balance1 surging back into surplus, retail sales1 strong and business confidence near 3 year highs2, but contrasted with a slip in construction activity1 and a jump in the unemployment rate1 to 6.0%. 

Global Economy – Janet Yellen took the helm of the Federal Reserve, remaining cautious despite good signs for the US economy.  The Winter games kept most of the Northern hemisphere preoccupied, though riots in Ukraine and eventual ousting of its President were of some concern to markets.  China continues to slow with manufacturing moving back towards contraction3, and emerging markets continued to feel the sting of money flowing back to the developed world. 

Investment Markets – The US, Europe and Australia all bounced back from a poor January with equity markets up over 4% for the month4.  The same could not be said for East Asia and less developed markets with China and Japan both retreating further and emerging market stocks losing ground4.

Outlook – While eyes were mostly on the Black Sea coast for the Winter games, after seeing off athletes and dignitaries, Russia has made its move across the waves with a soft takeover of Crimea. While this strategy has minor bearing on current economic activity, implications for Russia and Europe are significant, with a peaceful resolution being the key to regional stability and continuing trade.  Any further political disturbances could start to increase the perception of risk in financial markets, which may highly detrimental at a time of stretched equity markets.

S&P/ASX 200 – 12 months to 28 February 2014

Source: Core Equity Services

Footnotes: 1. Data from Australian Bureau of Statistics; 2. NAB Business Survey; 3. HSBC PMI; 4. Bloomberg data.

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