Following the late January 2017 waver in sentiment, it was back to good news for growth market investors over February, as markets continued along the now labelled ‘Trump rally’. Health Care and Information Technology (IT) were large contributors to the performance of global markets, while Energy and Materials contracted over the month following a period of strong growth.
Expectations for economic growth remained heightened in February, as Donald Trump continued to push his agenda of tax cuts, less regulation and higher domestic spending. The Dow Jones hit the historic 20,000 mark on 25 January 2017, and continued well into February, opening on 1 March 2017 at over 21,000.
The broad Australian equity market expanded over February, with the S&P/ASX 300 Accumulation Index increasing 2.2% for the month. Returns were positive across the market spectrum, with the best relative performer being the S&P/ASX 50 Accum, increasing 2.4% for the month. The worst performer was the S&P/ASX Small Ordinaries, increasing by 1.3% over the month. The best performing sectors were Consumer Staples (+6.0%) and Real Estate (+4.3%). The weakest performing sectors were Materials (-3.2%) and Telecom Services (-3.1%). The largest positive contributors to the return of the index were Westpac, ANZ and NAB, with absolute returns of 6.7%, 5.9% and 6.0% respectively. In contrast, the most significant detractors from performance were BHP, Rio Tinto and Telstra with absolute returns of -6.0%, -6.8% and -3.1% respectively.
The broad MSCI World ex Australia Index was up 3.2% in hedged terms and 1.5% in unhedged terms over the month, as the Australian dollar appreciated against the major currencies over February. The strongest performing sectors were Healthcare (+4.4%) and Information Technology (+3.4%), while Energy (-3.4%) and Materials (-2.0%) were the worst performers. In Australian dollar terms, the Global Small Cap sector increased by 0.9% while Emerging Markets increased 1.8% in unhedged Australian dollar terms. Over February, the NASDAQ returned 3.8%, the S&P 500 Composite Index rose by 4.0% and the Dow Jones Industrial Average increased 5.2%, all in US dollar terms. Major European equity markets also experienced positive returns as the FTSE 100 (UK) increased 3.1%, the CAC 40 (France) increased 2.3% and the DAX 30 (Germany) increased 2.6%. In Asia, the Indian BSE 500 was up 4.4%, the Hang Seng Index up 2.0%, the SSE Composite (China) up 2.6% and the Japanese TOPIX was also up 0.9% over February.
The Australian dollar experienced positive movement over February, appreciating against all the major currencies for the second consecutive month and finishing with an increased Trade Weighted Index of 66.7 on 28 February 2017. The Australian dollar appreciated against the US dollar (+1.3%), the Pound Sterling (+2.2%), the Euro (+2.6%) and the Yen (+0.7%). On a trade-weighted basis, the local currency increased 1.7% over the month.
COMMODITIES Commodity prices saw mixed movements over February, with oil decreasing while iron ore and gold prices saw strong growth. The S&P GSCI Commodity Total Return Index decreased 1.0% for the month. Gold prices finished the month at US$1,256.64 per ounce for a 3.7% increase over the period. The oil price decreased, by 1.7% to $55.22 per barrel. Iron ore prices increased again over the month, by 10.2% to US$92.0 per metric tonne.