Investor update

You should always consult your Bridges financial planner before taking action on any recommendation given.

Information current as at 28 February 2010

The local market clawed back around a quarter of January’s losses with a rise of 1.5% in February, but conditions were choppy.  Earnings reports were on balance slightly ahead of expectations but not sufficiently reassuring to overcome concerns about global growth and sovereign risk. The US was one of the strongest major markets over the month (S&P500 +2.7%) while Europe struggled with concerns over the euro and evidence of a sluggish recovery (Euro Stoxx 50 -3.3%).  Asia was mixed (MSCI APEX 50 +0.1%).

Australian Shares

Most of the ASX200 reported earnings for the period ending December 2009.  Positive surprises marginally outweighed negative ones, but many companies gave a subdued outlook or appeared to guide conservatively.  Bank results and updates suggested that the loan loss cycle is improving more quickly than anticipated.  The Banks (+3.5%) gained from positive earnings news while Resources (+2.1%) made back some ground after a weak start to the year.  The Telecommunications sector (-10.2%) was the clear laggard as Telstra reported disappointing results. 

Economic news

The Reserve Bank surprised most commentators by leaving rates unchanged at its meeting in February.  Data on employment again delivered a positive surprise but other indicators were mixed.  The Board’s decision may also have reflected the volatility in financial markets.  China announced a further tightening of bank reserve ratios; Greek sovereign debt remained under pressure as ratings agencies raised the prospect of a further downgrade.  The Fed made a step towards normalising US money markets by raising its discount rate, used for ‘emergency’ borrowing by banks; but Chairman Bernanke reiterated that the more important funds rate would remain low for a prolonged period.  US data gave mixed signals with jobs, home sales and consumer confidence coming in softer than expected while housing starts and retail sales were ahead of forecasts. The US dollar continued its rally with the euro being the focus of selling pressure.

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