BT Monthly Markets Chart Pack – December 2009

An overview of movements in global financial marketsPrepared by BT Wrap for the adviser market

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Global share markets closed higher in December...

Global share market performance was very positive in December as concerns surrounding Dubai’s debt obligations eased after the United Arab Emirates’ central bank said that it would bail them out. In the US, the benchmark S&P 500 Index closed the month up 1.8% and this had a positive knock-on effect elsewhere, with markets in Japan (+12.8%), the UK (+4.3%) and Europe (+6.0%) also closing higher.

The Australian share market ended the year very strongly, with the S&P/ASX 200 Accumulation Index building on last month’s gains to close December 3.7% higher. Contributing to the gains were a jump in commodity prices – which helped to push mining heavyweights like BHP Billiton and Rio Tinto higher – and a strong lead from the US market.

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Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$.Source: BT Financial Group, MSCI

Impact of major market events on global shares since 1987

…and continue to perform well over the long-term, despite some major market events

700

1,200

1,700

2,200

2,700

3,200

3,700

4,200

4,700

5,200

5,700

6,200

Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09

Jan 91Gulf War

Feb 94Bond Market Crash

Aug 97Asian Currency Crisis

Jul 98Russian Bond Crisis

Jul 01Tech Wreck

Sep 01Attack on Twin Towers

Jun 07US Sub-prime Crisis

Nov 89Fall of the Berlin Wall Mar 03

Troops enter Iraq

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Source: BT Financial Group, Premium Data

S&P/ASX 200 Accumulation Index – year to 31 December 2009

The Australian share market closed 3.7% higher in December

21,000

22,500

24,000

25,500

27,000

28,500

30,000

31,500

33,000

34,500

31/12/2008 28/02/2009 30/04/2009 30/06/2009 31/08/2009 31/10/2009 31/12/2009

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Key Australian economic news – December

The Australian economy added 31,200 jobs in November which helped to push the unemployment rate down to 5.7%.

The Westpac/Melbourne Institute’s consumer sentiment survey eased a further 3.8% in December – its second consecutive monthly decline.

Retail sales rose 1.4% in November, beating the market’s expectation of 0.3%.

National Australia Bank’s business conditions survey fell slightly in November, reflecting declines in both profitability and employment measures.

Newspaper job advertisements jumped 8.3% in November, though they remain well down in year-end terms (-18.7%).

Australia’s current account deficit was A$16.2 billion in the September quarter – a touch lower than what the market had expected (A$16.8 billion).

Source: BT Financial Group

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The Australian dollar closed the month lower against the US dollar

The Australian dollar (A$) fell against its US counterpart in December, losing 1.9% as expectations of further interest rate hikes by the Reserve Bank began to fade. It was the Australian dollar’s first monthly decline against the US dollar since January 2009.

At the end of December:

A$1 bought US$0.8972 -1.9%

€0.6266 +2.8%

¥83.35 +5.6%

Source: BT Financial Group

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Currency markets – A$ per US dollar

Source: BT Financial Group. Figures at 31 December 2009

0.6300

0.6600

0.6900

0.7200

0.7500

0.7800

0.8100

0.8400

0.8700

0.9000

0.9300

0.9600

0.9900

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

The Australian dollar versus the US dollar…

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Currency markets – A$ per Euro

the Euro…

0.4900

0.5050

0.5200

0.5350

0.5500

0.5650

0.5800

0.5950

0.6100

0.6250

0.6400

0.6550

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Source: BT Financial Group. Figures at 31 December 2009

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and the Yen

55

60

65

70

75

80

85

90

95

100

105

110

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Currency markets – A$ per Yen

Source: BT Financial Group. Figures at 31 December 2009

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Official world interest rate movements – December

Interest rates in the major economies remained largely unchanged in December. Australia was the only central bank to move, raising the official cash rate by 0.25% (to 3.75%) early in the month.

Current rate Last movedDirection of last move

Australia 3.75% Dec 2009

US 0% - 0.25% Dec 2008

Europe (ECB) 1.00% May 2009

Japan 0.10% Dec 2008

United Kingdom 0.50% Mar 2009

Source: BT Financial Group

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Source: BT Financial Group

31 December 2009

Global share market returns

1 year 3 years (pa) 5 years (pa)

Global

S&P 500 Index (US) 23.45% -7.70% -1.65%

Nasdaq (US Tech.) 43.89% -2.06% 0.85%

Nikkei 225 (Japan) 19.04% -15.09% -1.70%

Hang Seng (Hong Kong) 52.02% 3.09% 8.98%

DAX (Germany) 23.85% -3.34% 6.96%

CAC (France) 22.32% -10.78% 0.60%

FTSE 100 (UK) 22.07% -4.53% 2.37%

Australia

S&P/ASX 200 Accum. Ind. 37.03% -0.70% 8.36%

S&P/ASX Small Ordinaries 57.43% -4.80% 6.73%

S&P/ASX 300 Listed Prop. 9.56% -23.44% -7.48%

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Short-term asset class performance

Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A , UBS Bank Bill 0+ years

1-year rolling returns to 31 December 2009 (%) Best performing asset class for the year

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994

Australian cash

3.47 7.60 6.73 6.02 5.74 5.62 4.90 4.77 5.24 6.27 5.01 5.14 5.63 7.57 8.06 5.34

Australian bonds

1.73 14.95 3.46 3.14 5.80 6.96 3.05 8.81 5.45 12.08 -1.22 9.54 12.23 11.87 18.63 -4.66

Australian property

9.56 -55.31 -8.36 34.05 12.70 32.18 8.81 11.85 14.99 18.79 -4.20 18.37 21.76 14.24 14.28 -6.32

Australian shares

37.03 -38.44 16.07 24.22 22.83 27.99 14.61 -8.77 10.36 6.36 18.74 9.80 12.67 14.35 21.10 -8.76

International bonds

8.04 9.23 6.63 4.41 6.62 8.92 6.62 11.57 8.29 9.74 0.28 10.08 10.71 9.48 20.62 -2.45

International shares

-0.30

-24.92 -2.60 11.49 16.84 9.94 -0.76 -27.44 -9.96 2.19 17.20 32.34 41.63 6.24 26.05 -8.43

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Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A

1-year returns to 31 December 2009 (%)

Short-term asset class performance (cont’d)

0.3

8.0

37.0

9.6

1.7

-24.9

9.2

-38.4

-55.3

15.0

31 December 2008

31 December 2009

Australian bonds

Listed property

Australian shares

Global bonds

Global shares

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Long-term asset class performance

Note: Accumulated returns based on $1,000 invested in December 1984Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, UBS Bank Bill 0+ years

31 December 2009

Australian bonds

Listed property

Australian shares

Cash

Global shares

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Source: BT Financial Group. West Texas Intermediate oil price at 31 December 2009

Oil prices – US$ per barrel

Oil prices were stronger in December due to a fall in US stockpiles and colder weather across North America

$0

$15

$30

$45

$60

$75

$90

$105

$120

$135

$150

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

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