Russell Market Review
Analysis of recent economic events and market movements
Volatile equity markets, record oil prices and high inflation – Investors should remain disciplined and diversified to come out on top
Extremely volatile equity markets were again the hallmark of the 2008 June quarter. Global and domestic equity markets staged a relief rally from mid-March to mid-May after the collapse and subsequent bail-out of Bear Stearns, the fifth largest US Investment Bank, by JPMorgan and the US Federal Reserve. However, record oil prices, multi-decade high inflation in emerging and developed countries, renewed US recession fears and the sub-prime credit crunch continuing to erode company balance sheets caused large declines in June.
The Australian equity market returned -1.7%.for the quarter. International equity markets unhedged were down 6.5%, while emerging markets, affected by global growth concerns, fell -5.6%. International property securities resumed their 2007 decline, falling 8.6%, while the battered Australian listed property trust sector fell another 15.8% after falling -19.1% in the first quarter. Fixed income markets were not immune from the market volatility and international bonds fell 0.6% while Australian bonds gained 0.4%.
The past 8 months have been amongst the most volatile of the last 20 years and have led many asset classes to post negative returns on an annual basis. Nonetheless, investors should be reminded that equity market corrections are a natural part of being a long term investor. History tells us that, although the outlook can appear bleak after periods of market declines, that these periods have often provided good opportunities for strong long term returns. The investment tenets of remaining disciplined and diversified are key to emerging strongly from the current market malaise.
Quick Overview
- Babcock & Brown, Australian infrastructure sector securities
- Listed property trusts
- Australian shares
- International shares
- International property
- Australian bonds
- International bonds
- Oil
- Inflation
- Emerging markets
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