“Risk on” markets continued 
  • Global shares rose 1% and 1.2% in hedged and unhedged terms, respectively. The rotation to stocks benefitting from a strong economic recovery regained favour in May. Continued decline of coronavirus cases in Europe and the US helped drive these cyclical names higher.
  • Australian shares outperformed global shares slightly, rising 2.3% in May. The leading sectors were financials (up 4.4%), healthcare (up 3.5%) and consumer discretionary stocks (up 3.4%). Technology (down 9.9%), Utilities (down 7%) and Energy (down 1.8%) were amongst the worst performers. Weakness in buy-now, pay-later operator Afterpay (down 21.1%) drove the tech sector result.
  • The Australian dollar (AUD) fell 1.4% against major currencies and rose 0.2% against the US dollar. Relative outperformance of the Eurozone following accelerating coronavirus vaccinations saw outperformance against the AUD.
  • Fixed income returns improved as bond yields fell. Australian bonds benefitted from the RBA commitment to keeping rates lower until at least 2024. In addition, softer US jobs numbers saw bond yields fall, benefitting international fixed income.

As the pandemic lingers


  • Coronavirus vaccine progress continued in a welcome fashion. EU vaccinations have contributed to a sizeable decline in coronavirus cases and supported economic reopening.
  • The coronavirus pandemic itself remains problematic for several countries including India and Brazil with the former seeing cases remain elevated after declining from sizeable highs.


  • The RBA left interest rates unchanged in its June meeting at 0.1% and continues to flag staying at this level until 2024.
  • The unemployment rate fell to 5.5% in April, continuing to decline from its high of 7.5% in July 2020. This month’s decline was driven by a fall in the participation rate with actual jobs numbers declining, driven by a fall in part-time employment. Importantly the end of JobKeeper has not yet had a material impact on the labour market although future releases will confirm this.
  • Australia’s vaccination program continues albeit at a slower pace with 5.3m doses administered as of early June.
  • Melbourne suffered another bout of lockdowns in response to a failure of hotel quarantine in Adelaide (the infected person subsequently travelled to Melbourne). These will be easing from 10 June.
  • Potential small outbreaks occurred in both Sydney and Perth triggering new restrictions but do not appear to be escalating at this juncture.

Major asset class performance (%)

Asset classes 1 month 1 year 5 years (p.a)
Australian shares 2.3 28.2 10.1
Global shares (hedged) 1.0 35.6 13.6
Global shares (unhedged) 1.2 20.4 12.8
Global small companies (unhedged) 0.5 34.3 12.4
Global emerging markets (unhedged) 2.1 29.5 12.4
Global listed property (hedged) 1.4 30.7 4.9
Cash 0.0 0.1 1.3
Australian fixed income 0.3 -1.2 3.3
International fixed income 0.2 -0.1 3.2
Source: Bloomberg & IOOF, 31 May 2021

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance


Exchange rates At close 30/4 % change 1 month % change 1 year
USD/AUD 0.77 0.2 16.0
Euro/AUD 0.63 -1.4 5.3
Yen/AUD 84.8 0.5 17.8
Trade weighted index 64.5 -1.4 8.0
Source: Bloomberg & IOOF, 31 May 2021. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.


Disclaimer: This report is prepared by IOOF Research for Millennium 3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252.  Millennium 3 Financial Services Pty Ltd is part of the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate (“IOOF”).

This report is for financial adviser use only – it is not to be distributed to clients. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Millennium 3 Financial Services Pty Ltd.

This report is current as at the date of issue but may be superseded by future publications.  

Millennium 3 Financial Services Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Millennium 3 Financial Services Pty Ltd and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision.

This report has been prepared in good faith and with reasonable care. Neither Millennium 3 Financial Services Pty Ltd, IOOF nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this report (including any projections, forecasts, estimates, prospects and returns and any omissions from this document).   It is important to note that investments may go up and down and past performance is not an indicator of future performance.

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