March 2021 – Update

The vaccine rollout continues, restrictions ease, and life is a little closer to normal despite occasional setbacks. There was a raft of positive economic news in March, which should make the Federal Treasurer’s job a little easier when he hands down the Budget on May 11. The Australian economy staged a remarkable V-shaped recovery in 2020, growing 3.1% in the December quarter and 3.4% the previous quarter – the biggest 6-month lift on record – after plunging into recession last calendar year. The contributor to the Federal budget was iron ore, which has doubled in price since March last year.

The NAB Business Confidence Index rose to an 11-year high of +16.4 points in February while the ANZ-Roy Morgan Consumer Confidence rating hit a 7-year high of 124 points in March, up 30% over the year. Confidence is widespread at present as reflected in a recent surge in new vehicle sales, housing construction and property values. It was also boosted by a fall in unemployment from 6.4% to a 13-month low of 5.8% in February. Additionally, Job ads in March have reached a 12 year high. Company profits have remained strong, with 86% of ASX200 companies reporting a profit in the December half-year. Although aggregate earnings fell 17%, dividends were up 5% compared to a year ago with an estimated $26 billion currently flowing to shareholders.

The sugar hit has done its job as it has passed through the system leaving us well placed. Sustaining momentum as the virus and our response evolves will be trickier. We expect the road ahead will be rocky from time to time.

Returns for the Financial Year to date (9 months) are below:
All Ordinaries: 7017, up 1016 points or +16.9%;
Listed Property Accumulation Index 55391, up 9767 or +21.4%;
90 Day Bank Bills 0.034%, down 35%;
AUD vs U.S. Dollar 0.76c, up 6.9 cents or 9.92%;
UK FTSE 100 6,713 points, up 543 points or 8.82%;
Dow Jones Industrial Avg, 32,981 points, up 7,783 points or 28.86%