The S&P/ASX 200 added 0.8% for the week, with financial sector gains offsetting the impact of lower commodity prices. The S&P 500 lost 0.4% as the implied probability of a March Fed hike reached 98%. Bond yields moved higher with US 10 year Treasuries up 10bps and Australian 10 year government bond yields up 17bps. Three of the five best performing ETFs for the week were domestic financial sector funds (MVB, QFN and OZF).
Precious metals declined with gold falling 1.9% and silver falling 4.4%. Crude oil fell by 9.1% to a 3 month low as US inventories hit record highs. The five poorest performing ETFs for the week were all commodity funds.
Fed expectations and lower commodity prices dragged the Australian dollar lower, with the currency falling below US75c before ending the week 0.8% lower.
The Australian ETF market saw inflows of A$79m and outflows of A$80m from domestically domiciled ETFs. The largest inflows were into cash and bond ETFs (AAA and IAF), while the biggest outflows were from the SPDR S&P/ASX 200 Fund (STW).
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