From Jonathan Bayes, consultant Chief Investment Officer, Bentleys Wealth Advisors
This is the start of a really busy month or so for Australian investors, with the Federal Budget due on Tuesday night and a likely formal election date announcement by the weekend.
Federal Budget & Federal Election ahead
The papers have been awash with expectations that the Budget will include a variety of handouts and promises of additional infrastructure spend as rightly they should.
With the Federal Budget likely back into surplus in the year ahead, the government is extremely well positioned and right to be spending some of their savings, particularly as business confidence in the local economy is at its lowest ebb in over 5 years.
However, the government has a lot of ground to make up between now and the election (likely dates Saturday May 11th or May 18th).
Should the Liberal Government begin to reel in what looks to be an unassailable Labor lead, we will likely see Australian share-markets become better supported, but again, right now this seems some way off.
U.S Quarterly Corporate Reporting Season unlikely to be positive catalyst
Beyond the Federal Budget and Election, we will see U.S. corporate reporting season kick off again in a fortnight’s time.
The softening global economy year-to-date leaves us pretty convinced it is highly unlikely we get much positive commentary from senior management, so this reporting season could be one of the more volatile and negative that we have seen in some time.
Global Growth remains mixed
Chinese manufacturing data for March released on the weekend showed a return to monthly growth, albeit at a very modest clip.
New orders improved modestly and there is some hope that confirmation of a U.S-Sino trade pact in the coming weeks will necessitate a global re-stocking, but on the face of the data, it is still lukewarm at best.
The U.S. will report their own March manufacturing survey data tonight, and that figure poses some risk to investors since economists seem to be predicting a flat month-on-month outcome despite growing evidence elsewhere to support the idea of continued easing in business conditions.
Much has been made of the shape of U.S bond yields of late, and whether this should be taken as a harbinger of recession.
Notably, U.S. 10-year bond yields touched an 18-month low last week, and U.S. interest rate markets have managed to price in one 0.25% interest rate cut in 2019 and a further 2x 0.25% rate cuts in 2020, as strong an indication as you are likely to get that interest rate investors are in fear of a slowdown in this decade long expansion.
Equities remain increasingly prone to downside risk, having conveniently ignored the threat of slowing economic momentum, with the U.S. S&P index within 3% of its September 2018 highs.
MCP Master Income Trust (MXT) continues to deliver exceptional unfranked income
At a time when investors seem increasingly attuned to where their portfolio income is generated, the MXT continues to deliver exceptional monthly income from its lending to corporate Australia.
The trust declared a monthly distribution equivalent to a 6.75% annual yield, well above the 4.75% targeted by the fund at IPO, and taking the last 6-months annualised, MXT is running at around a 6.2% annual income distribution on its $2.00 issue price.
We feel this is and has been a standout defensive position of ours and we remain confident in both the trust and its manager’s ability to continue to generate excellent unfranked monthly income for investors.
Have a great week.
Friday 5pm values
| Index | Change | % | |
| All Ordinaries | 6261 | -20 | -0.3% |
| S&P / ASX 200 | 6181 | -14 | -0.2% |
| Property Trust Index | 1567 | +10 | +0.6% |
| Utilities Index | 8143 | -53 | -0.6% |
| Financials Index | 5831 | -37 | -0.6% |
| Materials Index | 13100 | +191 | +1.5% |
| Energy Index | 10988 | -467 | -4.1% |
Friday Closing Values
| Index | Change | % | |
| U.S. S&P 500 | 2834 | +33 | +1.2% |
| London’s FTSE | 7279 | +71 | +1.0% |
| Japan’s Nikkei | 21206 | -421 | -1.9% |
| Hang Seng | 29051 | -62 | -0.2% |
| China’s Shanghai | 3091 | -13 | -0.4% |
Key Dates: Australian Companies
| Mon 1st April 2019 | Div Ex-Date – Suncorp (SUN)
Div Pay Date – AMCOR (AMC) |
| Tue 2nd April 2019 | FEDERAL BUDGET ANNOUNCED
Div Ex-Date – Adelaide Brighton (ABC) Div Pay Date – Bluescope (BSL) |
| Wed 3rd April 2019 | N/A |
| Thu 4th April 2019 | Div Pay Date – Crown (CWN), QUBE (QUB) |
| Fri 5th April 2019 | Div Pay Date – Carsales (CAR), Caltex (CTX), Spark (SPK), Treasury Wine (TWE), Woolworths (WOW) |
Monday 1 April 2019, 130pm
For more information on the above please contact Bentleys Wealth Advisors directly or on +61 2 9220 0700.
This information is general in nature and is provided by Bentleys Wealth Advisors. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
