Global Markets Review - December

The highlight for December was almost certainly the stunning collapse in oil prices, which was associated with further weakness in the Australian dollar.

By David Bassanese · 23 Jan 2015

By David Bassanese ·
23 Jan 2015

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The highlight for December 2014 was most certainly the stunning collapse in oil prices. This was associated with further weakness in the A$. On a hedged basis, however, the local equity market produced modest gains in line with the global benchmark, with interest-rate sensitive financials and property sectors outperforming resources.

A major theme was that weaker oil prices added to expectations that global inflation and interest rates will stay low, supporting both fixed income and equity markets.

Looking ahead for the year, the fact that central banks remain more fearful of deflation than asset price bubbles should underpin risk markets in 2015. As regards interest rates, our base case view is that the RBA will leave interest rates on hold, for an unprecedented two years running.

This means that while resource stocks may do better by H2 ’15, the “yield chase” may well remain an important theme in the local equity market for some time.

For more details on the performance of global markets in December and the outlook for 2015, download David's full Global Markets Review. For information on BetaShares funds, visit the BetaShares website.

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Frequently Asked Questions about this Article…

What was the major highlight in global markets for December 2014?

The major highlight for December 2014 was the stunning collapse in oil prices, which had significant implications for global markets.

How did the collapse in oil prices affect the Australian dollar and local equity market?

The collapse in oil prices was associated with further weakness in the Australian dollar. However, on a hedged basis, the local equity market produced modest gains in line with the global benchmark.

Which sectors outperformed in the local equity market during December 2014?

Interest-rate sensitive financials and property sectors outperformed the resources sector in the local equity market during December 2014.

What impact did weaker oil prices have on global inflation and interest rates?

Weaker oil prices added to expectations that global inflation and interest rates would stay low, which supported both fixed income and equity markets.

What is the outlook for interest rates in Australia for 2015?

The outlook for interest rates in Australia for 2015 suggests that the Reserve Bank of Australia (RBA) will likely leave interest rates on hold for an unprecedented two years running.

How might resource stocks perform in the latter half of 2015?

Resource stocks may perform better by the second half of 2015, as the market adjusts to ongoing economic conditions.

What investment theme might remain important in the local equity market?

The 'yield chase' might remain an important theme in the local equity market for some time, as investors seek returns in a low-interest-rate environment.

Where can I find more detailed information on global market performance and outlook?

For more detailed information on the performance of global markets in December and the outlook for 2015, you can download David's full Global Markets Review or visit the BetaShares website.