The activity in the world markets does not stop, and processing the recent changes requires a very patient mind. At the present time this will be important for anyone with investment exposure particularly within their superannuation which is the most common.

In this update we have prepared a brief on the key issues, numbers and short points about our economy, investment markets, currencies and generally issues that impact our financial lives.


Current Rates and Key Numbers


Arrows indicate change over last 6 months:

  1. RBA Cash Rate: 2.50% ↔
  2. 1-year bank deposit rate: 3.55%* ↓
  3. Average Standard Variable Mortgage Rate: 5.15%  ↔
  4. Two Year Fixed Mortgage Rate: 4.99% ↔
  5. AUD/USD: $0.9166 ↑
  6. AUD/GBP: £0.5539 / $1.81 ↑
  7. Australian Share Market: 5,396 points ↑
  8. Average Dividend Yield of Australian Share Market:  4.85% ↑

*(average of major 4 banks)

A Brief Review of What Has Been Happening around the World

  1. Australian shares were quite volatile at the beginning of this year. January’s 3.0% decline in the S&P/ASX 200 Accumulation Index was followed by a 5.0% rise in February, pushing the market up towards its highest level since mid-2008.
  2. The Reserve Bank of Australia (RBA) held the cash rate steady at 2.5% for an eighth consecutive month at its March 2014 meeting.
  3. The RBA surprised some by explicitly removing its mild easing bias and reference to the Australian dollar (AUD) being “uncomfortably high”. The Board is now looking for a “period of stability in interest rates”.
  4. The RBA revised-up its growth forecasts by 0.25%, with GDP now expected to be 2.5% for the year. A return to near-trend growth of 3.0% per year is expected in the first half of 2015 (interest rates rising?).
  5. Retail sales rose for an eighth consecutive month in December, up by 0.5% to be 5.7% higher over the year. This was the strongest outcome in four years.

  1. Data released showed that Britain’s economy expanded at 0.8 per cent.
  2. Concerns of a housing bubble in England surfaced as confidence in the British economy continued to grow.
  3. In October, lenders granted the most number of mortgages since February 2008, while data also showed that house values were at their highest level in five years.
  4. While Bank of England Governor Mark Carney welcomed this news, he suggested that if such activity was to continue, interest rates may have to rise earlier than anticipated. However this is not expected to take place until the unemployment rate falls to 7 per cent

United States
  1. The US Congress voted to suspend the debt ceiling until 15 March 2015.
  2. Retail sales declined by 0.4% in January. This was attributed to bad weather (coldest start to a year in 20 years) and also uneven labour market performance.




Level at 
31 Dec 13

3 month 


1 year 

Australia (S&P/ASX 200)





US (S&P 500)











Level at 
31 Dec 13

3 month 


1 year 

US Dollar per Australian Dollar





Pound Sterling per Australian Dollar






Looking Ahead:

There is little evidence non-mining business investment will pick up sufficiently to assist the economy in transitioning from the mining boom. There is a consensus the unemployment rate will rise to between 6% and 6.5%  by mid-2014. This is likely to translate to the cash rate remaining low for much of 2014.

It is almost coming to tax time again, there are many strategies and pre-planning you can do to ensure you achieve the best result from your tax return. If you would like some assistance or a chat about your upcoming tax return, the earlier we start the better.

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