Market Wrap February 2019

Posted in Wealth
07/03/2019 Level One


  • Market Performance – The ASX200 was up 5.2%, the strongest month since mid-2016.
  • Reporting Season – Cost pressures were the main downside this reporting season making it the weakest reporting season in 4 years. On the upside 21% of ASX 100 companies delivered larger than expected dividends and earnings for 33% of companies beat analyst expectations by 2%.
  • Sector Performance – One of the top performing sectors was the Energy Sector at 7.9% and worst performing sector was the Consumer Staples Sector coming in at -1.5%.
  • Dividend Payout – Expected total dividend payout for companies will be pushed to a record $84 billion for the end of the 2019 financial year. Proposed changes to franking credits if Labor is elected were a key driver.
  • Global – The S&P 500 in the US was up 3.2% for February.



  • House Prices – In February housing prices fell 0.7% seeing an annual decline of 6.3%, the worst since March 2009. Sydney and Melbourne prices fell by -1.0% over the month to bring an annual drop of -10.4% and -9.1% respectively.
  • Auctions – The last weekend of February saw the highest number of auctions so far this year with 2,293 properties. This is significantly lower than the 3,026 properties going for auction the same time last year. Sales at auctions have collapsed by 50% compared to the prior year.
  • Vendor Discounts – Discounts from vendors in Sydney and Melbourne are approximately 7-7.5%, the highest level since 2009.
  • Rental Yields – Sydney recorded the lowest rental yields at 3.4% over past three months.
  • Residential Approvals – Residential Building Approvals are down 28.6% to 173,000 on an annualised basis which is near 5-year lows.



  • Interest Rates – UBS and Westpac forecast one or two interest rate cuts this calendar year.
  • GDP – GDP expectations cut by 0.3% by a below-consensus outlook from UBS to 2.3% for 2019.
  • Exports – Australia’s coal earnings set to exceed $67 Billion in 2018/19 to become largest commodity export according to Resource Minister Matt Canavan.
  • Credit – Credit conditions tightened on the back of the Royal Commission with accelerating weakness in home prices, sales, approvals, loans and credit growth which are now all near 5-year lows.
  • Employment – Employment in January rose a greater than expected 39,000 jobs, whilst the unemployment rate held at 5.0% however is expected to rise. ANZ job ads fell to the worst in 5 years indicating weaker employment growth going forward.
  • Exchange Rates – The Australian Dollar weaker against the US Dollar at $0.711, falling 1.9% throughout February.
  • US – US President Trump has postponed the initial March 1 tariff increases as a result of “substantial progress” in negotiations with China. US jobs growth surged in January to an incredible 304,000. Unemployment is at 50-year lows in the US.
Sources: UBS, Westpac, ABS, US BLS, CoreLogic, BIS Oxford Economics, AFR

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