Civil unrest in the Middle East and a relatively poor domestic reporting season were the hot topics of the month.
The All Ordinaries Index shrugged off the negative sentiment to gain 1.5% and close February at 4,922.6 points.
Global markets were also generally positive with the Dow Jones Index gaining 2.8%, the FTSE gaining 1.7%, the Hang Seng falling 0.5% and the Nikkei 225 Index gaining 3.8%.
Civil unrest in the Middle East was a key theme in February. This saw the ousting of President Hosni Mubarak in Egypt. Protests then spread to the neighbouring Libya – with international pressure on Moammar Gadhafi to stand-down.
In further developments, protests have now spread to the Sultanate of Oman. Like Libya, Oman is an oil producer of note. Oman is on the Arabian peninsular, so the dominant oil producer of Saudi Arabia continues to be surrounded by unrest.
The situation in the Middle East will be closely monitored by world powers over the coming days and weeks. An oil supply shock will no doubt have a flow-on effect to financial markets.
Last month I wrote that the second round of fiscal stimulus in the US (referred to as QE2) appears to be working. This continues to be the case...
The sharp contrast between corporate results in the US and in Australia was highlighted in February. The Australian interim reporting season results generated far more earnings "misses" than "beats”. Although many analysts are not concerned, citing that the Australian sharemarket takes guidance from the US.
QE2 is scheduled to end in July this year. It remains to be seen if this second round of stimulus will be enough. If not, don’t rule out a third round of fiscal stimulus in the US.
The Australian Dollar remains strong and is currently buying US99.99 cents to the dollar.
The Reserve Bank board meets today to assess interest rates, with expectations of the cash rate to remain on hold at 4.75% per annum.
For more information please contact Ryan Love on 1300 856 338 or e-mail ryan.love@apexpartners.com.au.
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