Weekly Market Update – 12 April 2021

Markets gain traction as bond yields taper off

Global equity markets climbed higher last week, rising +2.37% as represented by the MSCI World Index in AUD terms.

Both the Dow Jones Industrial Average and S&P500 indexes bolstered this bounce-back, with the indexes strengthening 1.74% and 2.34% respectively, closing at record all-time highs at Friday’s close.

The driver of this boost can be attributed to the 10-year US treasury yield rates plateauing at around 1.74%, which provided investors with a sigh of relief from the recent rally in yields.

RBA leaves interest rates unchanged post-Easter

The Reserve Bank of Australia has opted to again leave interest rates unchanged, marking the fourth consecutive meeting of rates being held at a record low of 0.10%.

The bank stated it was monitoring risks in the housing market, after house price growth surged to a three-decade high. Calls to increase interest rates to cool-off the boom were dismissed. Governor Phillip Lowe once again echoed that interest rates would remain untouched until actual inflation hits the target of two to three per cent and wages materially increase.  The RBA has previously stated this is unlikely to occur before 2024 at the earliest.

Comments from the RBA on Australia’s overall economic recovery appear to be positive, with the recovery being well underway.

The Federal Government has recently ceased Coronavirus supplement program alongside the termination of the JobKeeper wage subsidy scheme at the end of March continues to bring uncertainty to the outlook within the near-term.

Optimistic US Employment Data out for March

Job data out from the US last week blew past analyst expectations, with 916,000 nonfarm payroll jobs being added in the month of March compared to the forecasted 675,000.

The data produced also showed the US’s unemployment rate pleasingly decline to 6%, which is the lowest recorded level since the pandemic first began.

Sectors that were hardest hit by the pandemic fueled the recovery, with the likes of the hospitality and leisure industry gaining 280,000 jobs within the month alone. Moreover, jobs in the likes of construction also rebounded well, adding 110,000 jobs following the cold snap suffered by the US’s mid-west last month.

Though the US still has a long road ahead, data such as this provides an optimistic outlook on the US’s ability to recover from the damages caused by the pandemic.

ASX Weekly Wrap

Domestically, markets were green last week, with the ASX200 climbing 2.37% and looking to breach 13-month highs over the four days markets were open.

Leading the charge ahead was the technology sector, climbing 2.5% as investors continued to shrug off concerns pertaining to higher bond yields. Z1P Co Ltd (Z1P), Xero Limited (XRO) and Afterpay Limited (APT) were all notable performers, with Afterpay returning 15.1% over the four days of trading off the release of strong U.S. active user data.

Gold miners were also active on the ASX last week, benefiting from inflating gold prices, with Silverlake Resources (SLR) being the best performer in the index returning 18.2%. Pleasingly for client portfolios, fellow gold miner Northern Star Resources Ltd (NST) also enjoyed a strong week, its share price advancing 6%.

Beyond equity markets, the 10-year yield on government bonds held steady at 1.70% and the Aussie dollar also wrapped the week buying 76.22 US cents.

Looking ahead

Monday 12th April 2021 – Friday 16th April 2021

  • Monday: China – (M2) Money Supply Data
  • Tuesday: Australia – NAB Business confidence survey, U.K and China – Balance of Payments figures and U.S – Core inflation data
  • Wednesday: Australia – Westpac consumer confidence survey
  • Thursday: Australia – Unemployment data, U.S – Retail sales data
  • Friday: China – Quarterly GDP growth figures and retail sales data

Friday 9th April, 5pm values

 IndexChange%
All Ordinaries 7249+184+2.6%
S&P / ASX 2006991+162+2.4%
Property Trust Index1468+42+2.9%
Utilities Index6306+35+0.6%
Financials Index6188+108+1.8%
Materials Index16531+395+2.5%

Friday 9th April, closing values

 IndexChange%
U.S. S&P 5004129+94+2.3%
London’s FTSE6916+202+3.0%
Japan’s Nikkei29768-441-1.5%
Hang Seng28695-171-0.6%
China’s Shanghai3451-22-0.6%

Key dividends

Monday 12th April 2021 – Friday 16th April 2021

  • Monday: Div Pay date – Metrics income opportunities trust (MOT), Metrics master income trust (MXT)
  • Tuesday: Div Pay date – Chorus Limited (CNU)
  • Wednesday: Div Pay date – Woolworths Ltd (WOW), TPG Telecom Ltd (TPG)
  • Thursday: Div Pay date – BWX Limited (BWX), Healius Limited (HLS), Reece Limited (RES), Rio Tinto Ltd (RIO)
  • Friday: Div Ex date – Coca-Cola Amatil Ltd (CLL)

Contact

Mark Johnson – Chairman of Investment Committee(03) 8825 4738
Guy Silbert – Investment Manager(03) 8825 4750

If you would like to discuss your situation, please speak to your adviser or email clientservices@primefinancial.com.au

Mark JohnsonT: (03) 8825 4738Cameron MorcherT: (03) 8825 4737
Livio Caiolfa T: (03) 8825 4748Michelle BromleyT: (03) 8825 4751
Marcus AingerT: (02) 9134 6292Nicole LewisT: (03) 8825 4734
Dylan CresswellT: (03) 8825 4707 Nicholas Miller T: (03) 8825 4722
Jarrod Rodda T: (03) 8825 4729

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (www.primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.

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