Quarterly Economic Update – September 2019

  • Positive Q3 for developed market equities
  • Real estate investment trusts again outperformed broader market
  • Emerging markets again lagged developed markets
  • Positive term premium drove fixed income markets, led by UK and Euro
  • Weaker Australian and NZ dollars boosted unhedged returns
  • News focus on US-China trade war, Brexit and Hong Kong unrest


Global Markets Summary

Equity and fixed income markets delivered another three months of positive returns in the September quarter, against a news backdrop dominated by the US-China trade war, Brexit, Hong Kong unrest and headlines about slowing global economic growth.

Global developed equity markets posted returns of more than 4% for the quarter, while the Australian market was up about 2.5% over the quarter. Emerging markets ended the quarter slightly weaker.

For the calendar year to date, developed equity markets delivered very solid gains of more than 20%, with New Zealand and Australia among the best performing counties. Emerging market returns were about half that.

In sectoral terms, real investment trusts (REITs) were top performers in developed markets, alongside utilities. in Australia, consumer staples stood out, white IT was the top sector in emerging markets. Energy stocks were global laggards.

In bond markets, the highlight was a very positive term premium as longer bonds beat shorter bonds. All the major yield curves remained inverted over the quarter, with the UK and Euro curves delivering the highest returns. Credit spreads increased marginally.

On currency markets, the Australian dollar weakened against the US dollar and Japanese yen, while strengthening against the NZ dollar, and to a lesser extent, against the Euro.

Select Headlines


  • USA’s Trump and China’s Xi, meeting at G20, agree to ceasefire in trade war
  • Reserve Bank of Australia, in second consecutive move, cuts crash rate to 1.0%
  • EU Leaders name Christine Lagarde as new head of European Central Bank
  • UK Conservatives choose Boris Johnson as PM as Brexit deadline looms
  • IMF cuts global economic growth forecast to lowest rate since GFC
  • Australia’s S&P/ASX-200 index completes 11-year journey back to record high


  • US Federal Reserve cuts interest rates for first time since GFC
  • China lets yuan weaken, escalating trade war and hitting stocks
  • Trump bows to economic fears in move to delay China tariffs
  • US Treasury yield curve inverts for first time in 12 years
  • Italy government collapses as nationalist-populist coalition falls apart
  • G7 summit in France ends with little progress on major issues


  • US-China trade war escalates as Trump slaps tariffs on $110B of goods
  • ECB cuts rates further into negative territory; pledges indefinite stimulus
  • Anti-extradition bill protests in Hong Kong draw Crude markets on edge after drone attack on Saudi oilfield
  • Strike in ‘repo’ market rate sparks US Federal Reserve intervention
  • UK Supreme Court rules Johnson’s suspension of parliament illegal
  • US House of Representatives launches Trump impeachment inquiry