Quarterly Economic Update – June 2019

  • Solid gains by developed equity markets caps off a strong financial year
  • Australia was one of the top performing share markets
  • Real estate investment trusts had a very strong year
  • Bond markets enjoyed strong returns on the back of narrowing credit spread
  • Small cap equities – both in Australia and globally were the worst performing asset classes


Global Markets Summary

Equity and fixed income markets delivered solid returns in the June quarter of 2019, capping off a strong Australian financial year.

The positive gains across markets came in a year with headlines dominated by US-China trade tensions, signs of slowing economic growth globally and a shift by central banks in many countries toward lower interest rates.

The Australian equity market was among the top performers globally, returning more than 8% over the quarter and more than 11% over the full financial year, with communication services, materials stocks and healthcare among the standout sectors.

Developed markets outside Australia returned just over 5% in the quarter and nearly 12% over the full financial year, with the United States one of the best performing countries.

Large company stocks beat small company stocks across the board in the quarter and the year. Likewise, value stocks lagged growth stocks in developed markets. This pattern was reversed in emerging markets.

Over the full year, real estate investment trusts or REITs outperformed the wider equity market in developed markets, although, again, emerging markets bucked this trend.

Sector returns also contrasted between developed and emerging markets, with energy the weakest performer in both Australia and other developed markets but ranking as the best overall in emerging markets over the full year.

In bond markets, yields fell across the major currencies in the quarter and the year. The term premium was positive, with longer-dated bonds beating shorter bonds. Likewise, the credit premium was positive, with corporate bonds beating government bonds.

On currency markets, the Australian dollar was broadly weaker over the year, posting its biggest falls against the Japanese yen, Swiss franc, Canadian and US dollars.

Select Headlines


  • IMF Downgrades global economic outlook; sees risk to downside
  • President Joko Widodo wins Indonesian Election; opposition claims fraud


  • Reserve Bank of NZ cuts official cash rate by 25 bps to 1.5%
  • Liberal National Party Coalition retains power in Australian federal election
  • China-US tensions heighten as US applies 25% tariff hike on Chinese imports
  • India’s BJP, under Narendra Modi, secures landslide election win


  • RBA cuts cash rates to record low of 1.25% in global monetary easing trend
  • UK PM Theresa May resigns as Conservative Party Leader amid Brexit stalemate
  • Anti-extradition bill protests in Hong Kong draw more than a million people
  • US President Trump and Chinese President Xi agree to restart trade negotiations