Positive signs in financial markets (September 2009)

After one of the worst global financial periods in history there is now significant commentary that would suggest the worst is behind us.

Certainly, in Australia, there is much to be optimistic about, particularly given our record of being one of the few countries not to endure a technical recession. This is backed up by recent Australian – and international – financial market results, as this summary outlines:

• The Australian Equity Market rose by 6.6% in August to close at its highest level since October 2008.
• Profit reporting has been generally better than expected.
• Businesses are continuing to raise capital in the share market.
• Building approvals and housing finance have risen in past months.
• Australian listed property trusts finished August more than 16% higher than the previous month.
• The Reserve Bank of Australia has left interest rates at 3% but with consumer and business confidence growing this is likely to rise in the near future.
• For managed funds, an independent information provider found that growth funds returned an average of 4.3% during August, with balanced and moderate funds achieving returns of 3.7% and 2.7% respectively.
• Australian and international bonds grew in August, by 0.7% and 1.3% respectively, with less volatility in the market.
• The Australian dollar ended August up 1.3% against the US dollar.
• Internationally, equities rose by 3.6% in local currency terms and continue to show positive signs.
• Global real estate investment trusts rose by more than 13% in August.
• In the U.S., the second quarter gross domestic product (GDP) fell by -1%, however, this was well above expectations.

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