Monthly Market Review

MARKET INSIGHTS

May 2020

Dancing to the stimulus beat

April was a very different month to March as markets rallied on the back of stimulus measures and hope that the worst of the economic shock would be felt in April as infection rate started to fall in many economies.

Market volatility declined from extreme levels. Developed stock markets outperformed emerging markets and the U.S. S&P 500 index returned 12.8% recovering close to 60% of its prior decline. Other developed equities are up but not the same extent. The ASX 200 gained 8.8% in April. Government bond yields remain low and corporate credit spreads narrowed as central banks committed to purchase more government and corporate bonds.

The shape of U

Business surveys plunged in April to record lows and by record amounts given and indication of how deep the economic contraction is likely to be in the second quarter. The global Purchasing Managers' Index for manufacturing and services fell to 39.8 and 24.0 respectively, someway from the breakeven level of 50. The hit to the services sector was larger than in prior downturns given the impact of containment measures.

The pandemic really gathered momentum in mid-March and the economic ramifications will be shown in the second quarter data for countries such as Australia, Europe and the U.S. There is some hope that these economies will follow China’s economic path as containment measures are eased. China did not escape unharmed, and the Chinese economy contracted by 6.8% year-over-year (y/y) in the first quarter before economic activity has slowly started to resume. However, risk assets are looking beyond this near term weakness towards the recovery that will follow.

The labour market will be key in the shape of the economic recovery. The staggered easing of social easing measures should eventually see people return to work. However, the rising unemployment rates mask those that have left the labour market and may never return.

After a series of aggressive actions by central banks around the world, April was a month of consolidation for most of them. The Bank of Japan stepped up its asset purchase program and removed the limit on government bond purchases while quadrupling the amount of corporate bonds it can buy. The European Central Bank (ECB) announced new cheap loans for banks. Meanwhile, the Reserve Bank of Australia(RBA) has moved to further support the bond market by taking investment grade bonds as collateral for its open market operations, even as it tapers the overall rate of bonds being purchased.

2J.P. MORGAN ASSET MANAGEMENT

MONTHLY MARKET REVIEW | MAY 2020

Economy:

• Indicators for Australia were mixed in April. Retail salessurged 10.1% y/y thanks to consumer stockpiling and thetrade surplus jumped to a record high of AUD 10billion as theexport of bulk commodities to China resumed. However,business and consumer sentiment weakened and the housingmarket slowed markedly. Early indicators of the labourmarket suggest the unemployment rate will jump in April.

• The U.S. and eurozone economies contracted by 4.8% and3.8%, respectively, in 1Q 2020, with consumption taking asignificant hit. The unemployment rate hit a post World War IIhigh of 14.7% as 20.5 millions people lost their jobs. This hashurt consumption and retail sales declined 8.4% in themonth.

• The Chinese economy shrank by 6.8% in the same period.While China is expected to slowly recover in 2Q, given thepandemic is under control, the U.S. and Europe are expectedto see further contraction in 2Q given lockdowns and socialdistancing measures.

Equities:

• The ASX 200 gained 8.8% over the month, with positivereturns across all sectors. Unsurprisingly it was the defensivesectors of technology (22.5%) and consumer discretionary(16.0%) that had the strongest returns. Energy (24.8%) wasthe other big winner as the oil price recovered from its lows.The sharp rally in markets has caused a strong re-rating invaluations and the ASX 200 was trading at a price–earnings(P/E) ratio of 17.8x at month end.

• The heavier weight in the S&P 500 to technology stockshelped it rise by a stronger 12.8% in the month and the MSCIEurope a muted 5.6%. In Asia, the MSCI Asia ex Japan Indexwas up 8.4% in the month, with those hard hit markets areshowing a greater magnitude of rebound. The Chineseonshore market underperformed relative to the globalmarkets with only a 6.5% gain for the CSI 300 in April, butwas still the best performer so far in 2020.

• The equity rally comes as earnings expectations fall leading torising P/E multiples. In the U.S. analysts are downgradingcorporate earnings as the 1Q earning season progresses. Only65% of companies have beat earnings expectations, wellbelow the average of 75% since 2012. Furthermore, theuncertain economic outlook mean many companies have notoffered or withdrawn guidance clouding the earnings outlook.Poor earnings are also forcing companies to review theirdividend policies, especially in the energy and financialsectors.

Fixed income:

• The 10-year Australian government bond yield rose 13bps to 0.89% in April. The RBA’s policy of keeping the 3-year yield lose to 0.25% is proving successful leading to a steeper yield curve. Meanwhile, the 10-year U.S. Treasury yield has been range bound around 0.6% for much of April. This reflects that the Federal Reserve’s (Fed’s) asset purchases have been successful in maintaining U.S. Treasury price stability, as well as restoring market liquidity. European government bond yields fell further with ongoing monetary easing by the ECB. Italy and Greece were the exceptions as politics weighed on the outlook for the fiscally weaker economies.

• The Fed’s liquidity support has helped to narrow corporatecredit spreads. U.S. investment-grade and high yield creditspreads narrowed by 58bps and 110bps, respectively, in April.Nonetheless, credit spreads remain above long-termaverages. There are also concerns that low oil prices couldcontinue to trouble high yield issuers in the energy sector.Agency mortgage-backed security and asset-backed securitiesalso performed better in April despite lingering concerns overdeterioration in U.S. household balance sheets. Emergingmarket fixed income enjoyed less of a boost since it does notbenefit directly from the Fed’s support, as well as concernsthat the pandemic could undermine the economic outlook andfiscal sustainability for a number of emerging markets.Nonetheless, they still managed to generate a positive returnin April.

Currencies and commodities:

• Oil had a historical month in April. Organization of thePetroleum Exporting Countries and major oil-producingcountries reached a deal to cut output by 10 million bpd, or10% of global output. This failed to support oil prices givenweaker expected demand. Brent crude hit a multi-year low ofUSD 20 per barrel, while West Texas Intermediate crudedipped below zero. With storage capacity declining in the U.S.many traders and refiners opted to pay others to take their oilrather than having to find somewhere to store it. In contrast,low yields have pushed the price of gold to above USD 1,700per ounce.

• The Australian dollar appreciated by 7% against the U.S.dollar (USD) in April given the relatively better containment ofviral spread in Australia and QE-lite measures by the RBA. TheJapanese yen and the euro also gained by 6.0% and 7.2%respectively against the greenback. The weaker USD reflectsthe risk-on nature of markets in April.

3

Consumer sentiment and business confidence Consumer sentiment and retail salesZ-score Year-over-year change 3-month moving average

Source: FactSet, Westpac, J.P. Morgan Asset Management; (Left) National Australia Bank; (Right) Australian Bureau of Statistics.Guide to the Markets – Australia. Data as of 30 April 2020.

Retail sales growth

Consumer sentiment

Business confidence

Consumer sentiment

-8

-6

-4

-2

0

2

4

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

5

80

85

90

95

100

105

110

0%

2%

4%

6%

8%

10%

'10 '11 '12 '13 '14 '15 '16 '17 '18 '19

4

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '199%

10%

11%

12%

13%

14%

15%

16%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

Unemployment and underutilisation rates Wage growthSeasonally adjusted Year-over-year change, excluding bonuses

Source: Australian Bureau of Statistics, FactSet, J.P. Morgan Asset Management.Guide to the Markets – Australia. Data as of 30 April 2020.

Mar 2020:

5.2%

Mar 2020:

14.0%

Underutilisation rateUnemployment rate Underemployment rate

(inverted)Wage growth

Mar 2020:

8.7%

4Q19:

2.2%

8

5

90

91

92

93

94

95

96

97

98

99

100

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Capital cities house prices House prices in different cyclesYear-over-year change, 3-month moving average Index to 100 at peak, national dwelling prices

Source: RPD CoreLogic, J.P. Morgan Asset Management.Guide to the Markets – Australia. Data as of 30 April 2020.

Sydney

Perth

Melbourne

Brisbane, Adelaide,

Canberra average

Months from peak

2008

2017

2010

1989

19942004

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

11

6

Mortgage lending Housing finance and house prices3-month annualised growth rate Year-over-year change

Source: Australian Bureau of Statistics, J.P. Morgan Asset Management; (Right) RPD CoreLogic.House price is the year-over-year change in the hedonic index for national dwelling prices. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 30 April 2020.

Owner-occupier

Investor

Housing finance commitments

(adv. 6 months, 3mma)House prices

-2%

0%

2%

4%

6%

8%

10%

12%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

18%

21%

-36%

-24%

-12%

0%

12%

24%

36%

48%

60%

'03 '05 '07 '09 '11 '13 '15 '17 '19

12

7

Global Purchasing Managers’ Index for manufacturing, quarterly

Source: AIG, FactSet, Markit, J.P. Morgan Asset Management. Heatmap colours are based on PMI relative to the 50 level, which indicates acceleration or deceleration of the sector, for the time period shown. Heatmap is based on quarterly averages, with the exception of the two most recent figures, which are single month readings. Data for Canada, Indonesia and Mexico are back-tested and filled in from December 2007 to November 2010 for Canada and May 2011 for Indonesia and Mexico due to lack of existing PMI figures for these countries. DM and EM represent developed markets and emerging markets, respectively.Guide to the Markets – Australia. Data as of 30 April 2020.

Mar Apr

Global 47.3 39.8

DM 45.9 36.8

EM 49.0 42.7

Australia 53.7 35.8

U.S. 48.5 36.1

Canada 46.1 33.0

UK 47.8 32.6

Japan 44.8 41.9

Eurozone 44.5 33.4

Germany 45.4 34.5

France 43.2 31.5

Italy 40.3 31.1

Spain 45.7 30.8

China 50.1 49.4

Indonesia 45.3 27.5

Korea 44.2 41.6

Taiwan 50.4 42.2

India 51.8 27.4

Brazil 48.4 36.0

Mexico 47.9 35.0

Russia 47.5 31.3

De

ve

lop

ed

Em

erg

ing

20202008 2009 2010 2011 2012 2013 20192014 2015 2016 2017 2018

18

8

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Apr '20 Ann. Vol.

13.1%

Small Cap

13.1%

2.1%

U.S.

2.1%

21.2%

Asia ex JP

19.7%

53.6%

U.S.

32.4%

24.3%

U.S.

13.7%

25.6%

Japan

12.1%

13.2%

Small Cap

13.2%

31.5%

Asia ex JP

35.9%

6.2%

U.S.

-4.4%

31.7%

U.S.

31.5%

-2.6%

U.S.

-9.3%

14.3%

Small Cap

14.3%

16.4%

U.S.

13.6%

Japan

16.7%

5.2%

Asia ex JP

15.6%

-10.4%

Portfolio

-9.9%

20.3%

Australia

20.3%

47.4%

Japan

54.4%

14.9%

Asia ex JP

7.7%

14.0%

U.S.

1.4%

12.5%

U.S.

12.0%

27.5%

EM

31.0%

-2.3%

Portfolio

-7.3%

24.8%

Europe

24.6%

-4.5%

Asia ex JP

-9.6%

8.8%

Australia

8.8%

9.9%

Japan

8.9%

Small Cap

14.4%

4.6%

EM

14.4%

-10.5%

Europe

-8.8%

18.4%

Europe

16.4%

46.2%

Europe

22.3%

8.7%

Portfolio

6.8%

10.2%

Small Cap

10.2%

12.1%

EM

10.1%

20.0%

Small Cap

20.0%

-2.8%

Australia

-2.8%

24.0%

Portfolio

23.7%

-6.0%

Japan

-13.9%

5.5%

U.S.

12.8%

9.6%

Portfolio

8.7%

Asia ex JP

13.5%

1.7%

Japan

1.0%

-10.5%

Australia

-10.5%

17.1%

EM

17.4%

30.7%

Portfolio

21.9%

7.3%

EM

5.6%

9.8%

Europe

5.4%

11.8%

Australia

11.8%

17.2%

Japan

22.2%

-4.2%

Japan

-16.0%

23.4%

Australia

23.4%

-10.4%

EM

-11.9%

5.2%

Portfolio

9.2%

9.0%

Asia ex JP

6.8%

U.S.

12.4%

1.6%

Portfolio

8.2%

-12.5%

Japan

-17.0%

15.8%

Portfolio

17.2%

20.2%

Australia

20.2%

5.7%

Japan

10.3%

8.4%

Portfolio

3.3%

9.4%

Portfolio

9.8%

16.9%

Europe

13.7%

-4.6%

Asia ex JP

-12.0%

21.4%

Small Cap

21.4%

-11.0%

Portfolio

-14.0%

2.1%

EM

8.8%

8.4%

Europe

7.8%

EM

12.1%

1.6%

Australia

1.6%

-17.1%

Asia ex JP

-14.6%

14.6%

U.S.

16.0%

19.9%

Asia ex JP

6.2%

5.6%

Australia

5.6%

2.6%

Australia

2.6%

6.3%

Asia ex JP

6.4%

16.7%

Portfolio

19.1%

-4.7%

EM

-9.7%

19.4%

Japan

18.1%

-13.7%

Europe

-17.3%

1.9%

Asia ex JP

8.4%

7.9%

Australia

7.9%

Portfolio

12.0%

1.0%

U.S.

15.1%

-18.2%

EM

-12.5%

6.6%

Small Cap

6.6%

13.4%

EM

3.8%

3.1%

Europe

5.2%

2.5%

Asia ex JP

-5.3%

4.0%

Japan

0.3%

12.8%

U.S.

21.8%

-4.8%

Europe

-10.0%

19.1%

EM

18.5%

-16.3%

Small Cap

-16.3%

-0.8%

Europe

5.6%

6.6%

EM

6.5%

Europe

11.7%

-8.3%

Europe

7.5%

-21.4%

Small Cap

-21.4%

6.2%

Japan

20.9%

-0.8%

Small Cap

-0.8%

-3.8%

Small Cap

-3.8%

-3.9%

EM

-5.4%

0.7%

Europe

7.9%

11.8%

Australia

11.8%

-8.7%

Small Cap

-8.7%

18.7%

Asia ex JP

18.2%

-16.3%

Australia

-16.3%

-1.5%

Japan

4.3%

4.1%

Small Cap

4.1%

Australia

11.4%

10-years '10 - '19

Source: FactSet, MSCI, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Annualised return (Ann.) and volatility (Vol.) covers the period 2010 to 2019. Volatility is based on local currency returns. Small Cap: S&P ASX Small Ordinaries; Asia ex JP: MSCI AC Asia ex Japan; EM: MSCI EM Index; Europe: MSCI Europe Index; Japan: TOPIX first section; Australia: ASX 200 Index; U.S.: S&P 500 Index. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 20% U.S.; 30% Australia; 15% EM; 15% Europe; 10% Japan; 10% small cap. All indices are total returns. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 30 April 2020.

AUD

Local

38

9

20.4

18.517.8

16.114.0

1.5 1.5

0.0x

0.4x

0.8x

1.2x

1.6x

2.0x

2.4x

2.8x

3.2x

3.6x

4.0x

4.4x

4.8x

5.2x

0x

5x

10x

15x

20x

25x

30x

35x

40x

U.S. World Australia Europe Japan EM Asia ex-JP

Pric

e-to

-bo

ok

Pri

ce-t

o-e

arn

ing

s

Sources of return Global valuationsTotal return, AUD Current and 20-year historical valuations*

Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.All return values are MSCI indices except the U.S. and Australia, which are the S&P 500 and ASX 200, respectively. *Multiple expansion is based on the forward P/E ratio and EPS growth outlook is based on NTMA earnings estimates. Chart is for illustrative purposes only. Past performance is not indicative of future results. Guide to the Markets – Australia. Data as of 30 April 2020.

Currency effect

Multiples*

Dividends

EPS growth

Total return

YTD2019 Axis

20-year range

Current

20-year average

80x

32%

29%

25%23%

20%19%

-3%

-6% -6%

-10%

-14%

-16%

-30%

-20%

-10%

0%

10%

20%

30%

40%

39

10

Comm.

Services

Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management. All calculations are total returns in local currency not annualised. Growth and value indices are sub-sets of the ASX 200 Index. Since market peak represents period 1 November 2007 to the end of the last quarter. Since market low is the period 10 March 2009 to the end of the last quarter. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 31 March 2020.

Financials MaterialsHealth

Care IndustrialsReal

Estate EnergyCons.

Discr. Tech Utilities AustraliaCons.

Staples

ASX 200 weight 26.2% 18.7% 13.8% 7.8% 6.9% 6.6% 6.6% 4.2% 4.2% 2.9% 2.1% 100%

Growth 13.6% 7.1% 28.3% 12.5% 8.7% 7.8% 12.5% 3.2% 3.0% 1.2% 2.1% 100%

Value 57.1% 28.4% 0.0% 0.0% 3.5% 3.0% 0.0% 4.9% 0.3% 0.0% 2.8% 100%

Apr '20 2.8 14.2 4.4 12.7 2.4 14.2 15.9 4.5 24.9 22.5 2.7 8.8

YTD -25.9 -10.8 6.5 -18.5 -0.8 -25.6 -17.9 -11.8 -34.9 -7.5 -6.6 -16.3

Since Market Peak

(February 2020)-32.0 -11.6 -10.5 -21.9 -10.8 -32.6 -24.5 -18.2 -31.9 -14.0 -9.5 -22.1

Since Market Low

(March 2020)19.8 22.6 12.8 30.1 2.5 32.5 35.8 8.6 46.3 52.7 13.4 21.5

Forward P/E Ratio 14.0x 13.2x 37.3x 30.1x 22.3x 13.4x 22.6x 18.0x 22.5x 44.3x 21.9x 17.8x

15-yr avg. 12.6x 13.3x 21.8x 18.8x 17.2x 13.0x 14.7x 13.6x 18.0x 19.9x 18.8x 14.1x

Trailing P/E Ratio 14.7x 12.5x 39.7x 29.7x 24.5x 15.8x 22.3x 19.1x 17.3x 43.7x 21.6x 17.8x

15-yr avg. 13.4x 14.6x 24.4x 21.7x 18.6x 14.5x 15.7x 13.8x 20.4x 21.9x 20.6x 15.2x

Dividend Yield 5.2% 5.4% 1.2% 3.5% 2.7% 4.8% 3.8% 4.0% 3.4% 1.3% 5.4% 4.1%

15-yr avg. 5.9% 3.1% 2.1% 4.3% 4.1% 6.8% 4.9% 6.8% 2.9% 2.7% 5.8% 4.6%

We

igh

tsR

etu

rn (

%)

P/E

Div

44

11

2015 2016 2017 2018 2019 YTD Apr '20 Ten-yr Ann.

14.5%

EM Debt

1.8%

15.3%

Global HY

15.9%

5.1%

Aus IG

5.1%

12.1%

US Treas.

0.9%

13.9%

Global HY

14.0%

16.9%

US Treas.

8.9%

0.1%

Aus IG

0.1%

9.9%

Global HY

7.7%

13.4%

US Treas.

0.8%

10.1%

EM Debt

9.6%

3.5%

Aus Gov

3.5%

9.7%

US TIPS

-1.3%

12.8%

EM Debt

12.6%

12.2%

US TIPS

4.5%

-0.4%

Aus Gov

-0.4%

8.7%

EM Debt

6.1%

10.9%

US TIPS

-1.4%

5.7%

Portfolio

5.6%

2.0%

Global HY

7.6%

7.4%

Global HY

-2.4%

11.7%

Global IG

11.5%

6.4%

Global IG

-0.9%

-2.0%

Global IG

4.8%

6.9%

Portfolio

5.3%

8.5%

Global IG

-3.6%

5.2%

US TIPS

4.7%

1.0%

Global IG

9.1%

7.1%

Global IG

-3.6%

9.5%

Portfolio

9.4%

4.8%

Portfolio

0.5%

-2.3% Global HY

4.5%

6.7%

Global IG

4.1%

7.8%

Global HY

-2.1%

4.8%

Global IG

4.3%

0.8%

Portfolio

5.2%

7.0%

Portfolio

0.6%

8.6%

US TIPS

8.4%

3.6%

Aus Gov

3.6%

-2.5%

Portfolio

1.5%

6.1%

Aus IG

6.1%

7.6%

Portfolio

0.5%

3.8%

Aus IG

3.8%

0.3%

EM Debt

8.3%

5.2%

EM Debt

-5.3%

7.8%

Aus Gov

7.8%

0.9%

Aus IG

0.9%

-3.9%

US TIPS

2.8%

5.9%

US TIPS

3.4%

3.0%

Aus IG

3.0%

2.5%

Aus Gov

2.5%

-4.6%

US TIPS

3.0%

5.1%

Aus Gov

5.1%

7.1%

Aus IG

7.1%

-1.1%

EM Debt

-7.9%

-5.7%

EM Debt

0.9%

5.6%

US Treas.

3.1%

2.3%

Aus Gov

2.3%

1.5%

US Treas.

1.0%

-5.3%

US Treas.

2.3%

3.9%

Aus IG

3.9%

7.0%

US Treas.

6.9%

-3.6%

Global HY

-9.7%

-5.9%

US Treas.

0.6%

5.5%

Aus Gov

5.5%

Fixed income sector returns

Source: Barclays, Bloomberg Finance L.P., BoA/ML, FactSet, J.P. Morgan Asset Management. Aus Gov: AusBond Treasury (0+Y); U.S. Treas.: Barclays U.S. Aggregate Government – Treasury; Global IG: Barclays Global Aggregate – Corporate – Investment Grade; Aus IG: Bloomberg AusBond Credit (0+Y); Global HY: BoA/ML Global High Yield; EM Debt: J.P. Morgan EMBI+; U.S. TIPS: Bloomberg Barclays U.S. Treasury Inflation-Protected (TIPS). Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 25% Aus Gov, 15% Aus IG, 10% Global IG, 15% Global HY, 10% EM Debt, 15% U.S. Treas., 10% U.S. TIPS. Correlation to U.S. Treasuries and Australian Treasuries are to the Barclays U.S. Treasury (10Y) and Bloomberg AusBond Treasury (7-10Y), respectively, for the past 10 years. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 30 April 2020.

EM Debt

Australia IG

Portfolio

Australia Gov

U.S. Treasury

U.S. TIPS

Global HY

Global IG

Correl to Treasuries

Yield Duration U.S. Australia

8.17% 4.4 Yrs -0.27 -0.22

6.12 8.2 0.16 0.12

2.54

2.36 7.2 0.14 0.04

1.78 3.7 0.49 0.82

0.68 6.8 0.73 0.98

0.51 7.1 0.98 0.73

-0.43 6.8 0.65 0.48

AUD

LCL

54

12

Price of oilBrent crude, nominal prices, USD / barrel

Fiscal breakeven oil priceUSD / barrel, 2020 estimates

U.S. crude oil inventories and rig count*Millions barrels Number of active rigs

Source: FactSet, J.P. Morgan Asset Management; (Top left) J.P. Morgan EM Macro bites, J.P. Morgan Securities; (Bottom left) Baker Hughes, U.S. Department of Energy.*Weekly U.S. crude oil and petroleum ending inventory includes strategic petroleum reserve, and active rig count represents both natural gas and oil rigs.Guide to the Markets – Australia. Data as of 30 April 2020.

Inventories (incl. SPR)

Active rigs

30 Apr 2020:

$25.27

Jul 2008:

$145.65

Dec 2008:

$34.27

Jun 2014:

$115.60

$0

$20

$40

$60

$80

$100

$120

Qatar Russia Kuwait Iraq UAE SaudiArabia

Nigeria

69

13

Iron ore price and FX Short rates (bps) and FXIron ore price and FX 2-year U.S. / Australia Treasury difference

Source: FactSet, J.P. Morgan Asset Management; (Left) Commodity Research Bureau; (Right) Tullett Prebon. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 30 April 2020.

Iron ore price AUD / USD

Spread (bps)

AUD / USD

71

14

-3

-2

-1

0

1

2

3

Currency deviation from 10-year average in real effective exchange rate* termsNumber of standard deviations away from average

Source: FactSet, J.P. Morgan Economic Research, J.P. Morgan Asset Management.*The real trade-weighted exchange rate index is the weighted average of a country’s currency relative to a basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country’s currency, with other countries within the basket. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Australia. Data as of 30 April 2020.

Min

Current

Max

Above average

Below average

72

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