Financial markets continued the strong start to the calendar year by posting solid returns in February, regaining most of the lost ground from late 2018. The “pause” in interest rate hikes by the US Federal Reserve provided the positive momentum to propel US shares 3.2% higher for the month to be now a staggering 16% higher since the December lows.
Similar gains for the month were recorded in both Europe and Japan however the Chinese market roared ahead by 12.3% as the government introduced a raft of stimulus measures to boost the local economy.
The Australian share market has been a laggard compared to global peers in recent times however it returned to form in February recording a healthy 6% rise. The local market was boosted by a relief rally in banks as the Hayne Royal Commission findings were less punitive than feared and a strong resource sector buoyed by higher commodity prices led by iron ore up 7.8% and oil up 10%.
With central banks around world joining the Fed to relax their stance on monetary policy, bond markets continued their rally as Australian 10-year bonds were 11 basis points firmer and US 10-year treasury yields declined 3 basis points.
The Australian dollar fell 2% against a US dollar that was marginally stronger against the major cross rates.