Market Update and Performance
At the close of trade on the 31st May, the S&P/ASX 200 ended down 29 points, or 0.5 per cent, to 5378.6, while the All Ordinaries fell 0.5 per cent, or 26 points, to 5447.8, sinking in the afternoon despite two attempts to claw back above 5400 points.
Despite the weakness the month was good to the S&P ASX 200 (ASX: XJO), finishing up 2.4%*, the best month of May since 2005. The unseasonably strong performance for May was spurred by the weak inflation numbers and the interest rate cut early in the month.
The gains for the month were again driven by the Banks. The Banking/Financial Index (ASX: XXJ) rallied 3.4%* in May. The Banks being the main beneficiaries of the May rate cut.
Looking forward the market will continue to be volatile. The traditional “Sell in May and Go away” sell off didn’t eventuate however with the XJO struggling at the 5,400 point level and with the End of Financial Year fast approaching a pullback is looking more likely than a push through the 5,400 point level.
On a valuation perspective analysts believe the market is slightly over valued which has led many investment banks to adjust their recommendation for Australian shares from outperform to neutral. Credit Suisse Private Baking and Wealth Management was one such IB indicating they remain “tactically cautious” on global equities.
Building materials companies also performed strongly with James Hardie (ASX: JHX) Boral (ASX: BLD & CSR Limited (ASX: CSR) rising strongly on the back of the east coast construction boom, in particular NSW.
HarbourSide Capital Performance
The month of May saw the HSC MDA’s perform strongly out performing all bench marks despite holding 30-40%* cash and having very limited exposure to the Banking sector. It’s a stock pickers market! Building materials shares in particular JHX and BLD have featured in many of the HSC portfolios over the last month and quarter.
Return* 1 month 3 month
Income Accelerator Strategy 2.55% 3.71%
Australian Income Strategy 2.98% 3.83%
Australian Growth Plus 4.71% 3.04%
Note: Performance is net of fees.
*Source; Interactive Brokers as at 31st May 2016.
HarbourSide Capital Pty Ltd (ACN: 166 765 537) an Authorised Representative (AR No. 448907) of HLK Group Pty Ltd (ACN: 161 284 500) which holds an Australian Financial Services Licence (AFSL no. 435746). Any information or advice contained on this marketing material is general in nature only