Market Update August 2021

Stocks continue to ignore bonds

  • Global shares rose 1.8% and 4% in hedged and unhedged terms, respectively. Growth stocks outperforming following strong earnings results by tech companies such as Alphabet (owner of the Google search engine).
  • Australian shares underperformed global shares, rising 1.1% in July. The leading sectors were materials (up 7.1%) buoyed by higher commodity prices and industrials (up 4.2%). Technology was one of the worst performers (down 6.9%).
  • The Australian dollar (AUD) fell 1.8% against major currencies and 2.1% against the US dollar. The persistence of the Delta strain domestically with lockdowns in both NSW and Queensland (the latter being particularly prolonged) cast a shadow of the strong economic recovery. This reduced the likelihood of rate increases in the near term and soured investor sentiment towards the AUD.
  • Fixed income returns continued to recover as bond yields fell. The growth of the Delta strain both at home and overseas has weakened optimism over global growth, underpinning bond demand. Bonds and stocks are arguably suggesting different views of the world, the former pessimistic (bond yields falling), the latter, optimistic (stocks going up) with the truth likely to play out over the coming year.

As the lockdowns extend in Australia:


  • Global business surveys suggest economic growth momentum remains positive but slowing, led by the US and Europe.
  • The UK experience with Delta stoked vaccine optimism with new daily cases materially declining from a recent 21 July peak of 47,723 per day to 25,934 per day in early August.

  • Inflation figures surprised on the upside with 3.8% growth for the year to June. This was driven by a strong rally in oil prices as demand recovered globally. Underlying inflation measures was subdued at 1.75%.
  • The spread of the Delta variant domestically has seen lockdowns in Sydney extended until 28 August and is expected to weigh on the economy and jobs market with an outbreak in Queensland prompting new restrictions.
  • Additional government support was introduced albeit dwarfed by 2020 efforts.
  • The RBA left its cash rate unchanged and flagged expectations of negative economic growth in the September quarter but anticipated an economic bounce back. It also reiterated its planned reduction of bond purchasing from early September.

Major asset class performance

Asset classes1 month %1 year %5 years (p.a.) %
Australian Shares1.1%28.6%10.0%
Australian Small Companies0.7%32.3%9.6%
Global shares (hedged)1.8%33.7%13.9%
Global shares (unhedged)4.0%31.8%15.2%
Global small companies (unhedged)1.4%42.2%13.7%
Global emerging markets (unhedged)-4.7%17.7%11.1%
Global listed property (hedged)3.9%33.6%4.5%
Australian fixed income1.8%0.5%3.4%
International fixed income1.3%0.1%3.0%

Source: Bloomberg & IOOF, 31 July 2021 

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries 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

Currency markets

Exchange ratesAt close on 30/41 month change %1 year change %
Trade weighted index61.6-1.8%-0.5%

Source: Bloomberg & IOOF, 30 July 2021.

All foreign exchange rates are rounded to two decimal places where appropriate.

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


This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. RI Advice Group 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 report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty. RI Advice Group Pty 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 RI Advice Group Pty 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 document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report.

General Advice Disclaimer:

The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.
For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit

Contact Us More from Our Blog
Market Update August 2021