Market update

Our new regular market update – 2010 so far…

This edition, we start the first of our new series of regular market updates. 

Towards the end of 2009 and as we moved into 2010, it became increasingly apparent that a global economic recovery was underway.

Below are some key points that summarise the global economic and market backdrop during the first quarter of 2010. For a more detailed review of events, please click here to be taken to the global economic review page.

  • During the first quarter of 2010, there was a clear divergence in terms of the nature of the recovery around the world. The emerging market economies performed the best, driven by strong domestic growth and robust export demand. In contrast the developed market economies lagged behind, although there were a few pockets of strength.
  • Investors were concerned about the sustainability of the European Union given the significant economic pressures faced by a number of its smaller economies. In particular, Greece remained in the spotlight as worries about the size of its fiscal deficit weighed negatively on sentiment.
  • Investors focused on how soon the world’s central banks would begin to withdraw the easy monetary policies they had implemented during the Global Financial Crisis. However, virtually all of the world’s major central banks left interest rates unchanged. The notable exception was the Reserve Bank of Australia (RBA), which raised interest rates from 3.75% to 4.0%.
  • GDP data confirmed further improvement in the New Zealand economy as it grew by 0.2% during the third quarter of 2009 (the most recent data available at the time of writing). Strong consumer and business confidence appears to be driving the economy’s strength.
  • In the currency markets, the Australian dollar was one of the stronger performers. While the New Zealand dollar lagged the Australian dollar, it held its ground against the US dollar and gained significantly against the Euro and Sterling.
  • Oil prices generally drifted higher on the back of strong global growth and a pick-up in industrial production. The price of a barrel of oil finished the quarter close to the US$80 level, having started the year at around the US$72 level.

For a more detailed review of events, please click here to be taken to the global economic review page.  Shortly we'll also be publishing individual sector reviews, which summarise the performance of the individual asset classes.  Please check back here soon.