Market view

Australia
The RBA left the official cash rate on hold at 2 per cent at its meeting on 1 September 2015 and again on 6 October 2015 where it has remained since May this year.

Credit growth numbers are showing some signs that regulatory initiatives are having an impact on investor lending. Employment figures continued to surprise on the upside with 17,400 jobs added in August. Australian house prices rose 0.9 per cent in September, following a 0.3 per cent rise in August.

United States
The US Federal Open Market Committee met on 16-17 September 2015 and decided to leave the official Fed Funds target rate at 0%-0.25%.

Chair Yellen did leave open the door for a rate hike this year and the Fed’s dot plot continues to show one rate hike before the end of 2015.

Europe
The European Central Bank met on 3 September 2015 and made no changes to policy. The main refinancing rate remains at 0.05 per cent and a target of €60bn of securities are to be purchased each month.

United Kingdom

As expected, the Bank of England left policy unchanged when it announced its decision on 10 September 2015 meeting. The Bank Rate was unchanged at 0.5% and the stock of asset purchases remained at £375bn. There was one dissent on the nine member board, the second meeting in a row. Market expectations have been pared back after the Fed left rates on hold and now point towards the first hike in Q2 2016.

Japan

The Bank of Japan’s policy board convened on 15 September 2015 and left its qualitative and quantitative easing program at an annual increase of ¥80trillion to its monetary base. There was one dissent at the meeting with Chief Economist, Takahide Kiuchi, proposing instead to taper annual Japanese Government Bond purchases to ¥45trillion and keeping asset buying, zero rates for as long as needed under flexible price target.

Australian dollar

The Australian dollar finished down 1.4 per cent against the USD in September to $US0.7017. The Australian dollar traded as low as $US0.6911 and as high as $US0.7219 during the month, largely reflective of changes in views of the first rate hike for the US Federal Reserve.

Commodities

Commodity prices traded with volatility again in September, weighed down by the US dollar and growth concerns in China. Overall commodity prices were weaker but this hides significant divergence of price performance between various commodities.

Australian equities

Weakness in the Australian equity market persisted in September, with the S&P/ASX 200 Accumulation Index declining by a further 3.0 per cent. The market remained volatile throughout the month, with regular and significant swings in investor sentiment.

Energy and Materials stocks remained under pressure, reflecting ongoing weakness in commodity prices.

Australian listed property

ASX-listed property stocks outperformed the broader share market, with the S&P/ASX 200 Property Accumulation Index declining in value by just 0.3 per cent.

Stocks exposed to discretionary consumer expenditure continued to perform relatively well. Scentre Group (+2.4 per cent) and Westfield Corporation (+2.3 per cent) were among the best performing stocks in the index. Official data has confirmed that retail sales growth in Australia remains reasonably robust, likely supported by ongoing low borrowing costs.

Source: Colonial First State