Market performance in detail
While growth assets performed well over the quarter, market attention has shifted to the threat of persistent high inflation and its implications for economic growth and monetary policy around the world.
Global sharemarkets outperformed Australian shares primarily due to the fall in the Australian dollar. China and other emerging markets – at earlier stages in their vaccination/reopening journeys and hence more vulnerable to growth slowdowns – were the weakest.
The Australian sharemarket’s modest performance masked significant sector dispersion – energy stocks boomed while materials tanked, reflecting sharp movements in commodity prices.
Asset class
|
3 months %
|
1 year %
|
3 years p.a. %
|
5 years p.a. %
|
Growth assets
|
Australian shares
|
1.8
|
30.9
|
9.9
|
10.5
|
Global shares
|
3.9
|
27.8
|
13.2
|
15.1
|
Australian property
|
4.8
|
30.7
|
9.2
|
7.7
|
Global property ($A hedged)
|
3.0
|
29.1
|
6.2
|
5.7
|
Global infrastructure ($A hedged)
|
-0.8
|
28.6
|
6.2
|
5.7
|
Defensive assets
|
Australian bonds
|
0.3
|
-1.5
|
4.1
|
3.1
|
International bonds ($A hedged)
|
0.1
|
-0.8
|
4.1
|
2.7
|
Data Source: FactSet based on representative market benchmarks. Past performance is not a reliable indicator of future performance. All data to 30 September 2021.
Energy resource prices surged driven by imbalance in supply and demand pursuant to global economic reopening, the iron ore price fell 40% reflecting the slowdown in China’s property construction and manufacturing sectors, dragging the performance of Australia’s major mining companies down with it.
Listed infrastructure and property asset classes experienced turbulent quarters. Rising bond yields weighed on both asset classes, with the infrastructure electricity-generation sector facing rising input costs due to the spike in energy resource prices.
Source: FactSet
After a solid start to the quarter most markets sold off in September, as you can see in the graph above, as investors were concerned the economic recovery was peaking, and inflationary pressures appeared more extensive and persistent than reserve banks initially expected.
The prospect of slower growth, higher inflation and higher interest rates undermined both growth and defensive assets late in the quarter, detracting from the strong performance of shares and real assets (like property). Global bonds finished relatively flat for the quarter as the prospect of tighter monetary policy in response to inflationary concerns drove bond yields higher.