Global markets severely underperformed domestic equities in January. The US was steady as the tech-heavy NASDAQ (+2.0%) outperformed the S&P 500 (-0.2%), in a month where President Trump’s impeachment trial began and the 2020 presidential election campaigns got underway. Europe was down as the UK finally exited the European Union after nearly four years (MSCI Europe ex-UK -1.1%, UK FTSE 100 -3.4%). Asia was the worst performer as Coronavirus fears spread across the continent. This was felt most in Hong Kong where the Hang Seng was down 6.7% (Nikkei 225 -1.9%, KOSPI -3.1%). Emerging markets (MSCI EM -3.3%) followed the rest of the world lower, though the largest constituent, China (CSI 300 -2.3%), was spared most of the Coronavirus impact by the Chinese New Year holidays, which saw suspended trading.

Domestically, the S&P/ASX 200 Accumulation was up 4.98% during the period. Health Care (+12.0%) was the dominant sector as a plethora of names were up double digits, including large caps CSL (CSL +13.2%) and ResMed (RMD +14.4%). Information Technology (+11.1%) was also very strong as Afterpay (APT +31.7%) went on a run and Link Administration Holdings (LNK +18.1%) made an accretive acquisition. The outsized moves have largely been attributed to the continuation of the trend that we saw for the majority of last year; companies that exhibit defensive earnings or high growth outperforming against value and cyclicals. The trade somewhat reversed in the latter stages of 2019 as bond yields ticked up, but Coronavirus fears and average economic data has pushed yields back down as we enter 2020.

Disclaimer

This document has been prepared by DNR Capital Pty Ltd, AFS Representative – 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. The general information in this document has been prepared without reference to any recipient’s objectives, financial situation or needs. Before making any financial investment decisions we recommend recipients obtain legal and taxation advice appropriate to their particular needs. Investment in a DNR Capital managed account can only be made on completion of all the required documentation.

Source: Motor Trader E-Magazine (March 2020)

11 March 2020