Market Update February 2022

Market slump in January

Global shares fell 2.2% and 5.1% in unhedged and hedged

terms, respectively. Global emerging markets rose 1.2% over

the month.

Australian shares performed poorly during January, with the

S&P/ASX 200 losing 6.4%. The leading sectors were Energy

(up 7.88%) and Utilities (up 2.56%). I.T. was again the worst

performing sector for the month (down 18.43%).

Fixed income returns for the month were very poor, returning

-1.0% domestically and -1.6% globally.

The Australian dollar (AUD) lost 2.70% against the US dollar

and 2.76% against the Yen. Note by mid-February, the AUD

is back up trading around 0.7185 USD.

Inflation and Tapering


• U.S inflation is still red hot. The consumer price index rose

0.6% for the month of January, 7.5% on a year-on-year basis,

and was the fastest rate since February 1982.

• Minutes of the January 25-26 Federal Open Market

Committee meeting stated, “that if inflation does not move

down as they expect, it would be appropriate for the

Committee to remove policy accommodation at a faster pace

than they currently anticipate”.

• China’s inflationary pressure continued to ease in January,

with the growth of both consumer and factory-gate prices

slowing further.


• Australia’s Consumer Price Index rose 1.3% in the December

quarter, bringing inflation for the full 2021 year to 3.5%.

• This is above the Reserve Bank of Australia’s medium-term

target range of 2-3% inflation. It will excite speculation about

the central bank lifting interest rates far sooner than expected.

• As expected, at the RBA’s February Board meeting, a

decision was made to end QE.

• The official cash rate remained at 0.10%, but the futures

market is pricing in 4 rate rises this year.

Major asset class performance

Asset classes1 month %1 year %5 years (p.a.) %
Australian Shares-
Australian Small Companies -
Global shares (hedged) -5.118.612.5
Global shares (unhedged) -2.227.315.1
Global small companies (unhedged) -4.713.5 11.6
Global emerging markets (unhedged) 1.21.0 9.9
Global listed property (hedged) -5.522.25.8
Australian fixed income-1.0-3.53.0
International fixed income-1.6-2.62.9

Source: Source: Bloomberg & IOOF, 31 December 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


This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group).The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees 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. The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below).The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. 

General Advice Disclaimer:

The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, 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 making a decision to 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. The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. 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

View Full Report
Market Update February 2022