LDB’s quarterly share market review: First quarter 2019

After ending 2018 on a disappointing note, the Australian stock market started the year well with a strong rally over January and February that saw the All Ordinaries Index rise by 9.5%.

The market climbed to a high of 6,344 in early March before trading slightly lower and ending the quarter at 6,261.

While the market fell short of the highs achieved at the end of August 2018, it represented a good recovery from recent lows and a welcome relief for investors.

Mixed earnings

Australia’s earnings reporting season for February/March 2019 revealed a mixed bag of results.

While 93% of companies reported a profit, investors were left underwhelmed with only half of those recording an increase in profits.

Dividend payouts remained fairly constant but some companies elected to pay a special dividend.

Uncertainty looms

The reporting season reflected a tougher environment for corporate Australia.

Businesses continue to deal with the fallout from overseas issues, including the US-China trade war, Brexit uncertainty and increased market volatility.

Companies also faced volatile market activity domestically too, as well as falling house prices, tighter lending by banks and low wages growth.

What’s next?

We expect further market volatility as these issues continue to play out in 2019.

The market will undoubtedly keep a close eye on the federal election campaign as it rolls out over the coming months.

Further housing weakness across the country and increased concerns of a technical recession in the US are also likely to affect market sentiment and investor behaviour.

Overall the ‘lower for longer’ theme remains intact with low inflation, low interest rates and low growth continuing for the foreseeable future.

With this in mind, if you have any concerns regarding your portfolio, make sure you talk to your financial advisor.