March 2010 investment commentary
Investment markets
Investment markets were largely positive in March as investors were heartened by the increased optimism on global growth. The increased likelihood of a successful resolution of the sovereign risk concerns in Greece also helped markets to move higher. The release of strong fourth quarter Gross Domestic Product (GDP) numbers showed that the domestic economy continues to perform well.
Equity market
The Australian equity market continued to perform strongly in March (up 6.1%), following the positive returns in February. The strong returns were led by the resource sector with increases in commodity prices providing impetus for higher share prices. Resource stocks were also boosted by renewed takeover activity in the sector. International equity markets moved higher in March with most major equity markets around the world stronger. International equity markets were buoyed by signs of stronger world economic growth and easing of sovereign risk concerns in Greece. Resource stocks were also the clear outperformers globally.
Fixed interest market
The Australian fixed interest market declined during the month as investors moved into the higher risk of equity markets on improved news on global economic growth and the potential successful resolution of the sovereign debt problems in Greece. Domestic fixed interest markets were also negatively affected by the Reserve Bank of Australia (RBA) raising interest rates at its April meeting. International fixed interest markets were positive during the month, as credit securities performed strongly while most major reserve banks kept interest rates on hold.