Market Overview: February 2008
An insight into future market performance and a concise market review
Stumbling across the finish line
Equity markets around the world stumbled in the closing months of 2007. The fourth quarter continued on from the pessimism that started during the August sub-prime meltdown, causing most major equity markets to dip into negative territory.
For global equities, the fall in the December quarter lead to a calendar year return of 6.2% for hedged investors, although the strength of the Australian dollar (rising 11.4% for the year against the US dollar) resulted in an unhedged return of -2.1%.
Despite declining over the quarter, Australian equities were once again the standout performer in 2007, rising 16.2% for the year, driven primarily by the Materials and Energy sectors. Traditionally defensive assets classes such as Australian Listed Property Trusts (LPT s) and Global Property Securities were hit hard by the subprime fallout, declining 8.4% and 17.8% over the year respectively. Australian and International Bonds both withstood the barrage to finish the year in positive territory, although investors with excess exposure to global credit markets felt the full force of the credit crunch.
Here is a summary of the recent market activity.
Quick Overview
- US sub-prime mortgage market is still a cause for concern
- Major equity markets weakened
- Global Property Securities hit hard
- Fixed interest endured the fallout to end the year in the positive
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