The September 2010 quarter ended up strongly as risk appetite returned to global equities. It was not all smooth sailing throughout the quarter as volatility continued to unsettle equities. The volatility in equities was largely dictated by similar macro factors in the last quarter.

Global growth up until the first half of the year has been strong, but growth from hereon is expected to slow. It will be a long while before the US and EU economies sort out their structural issues.

Much of the future growth will come from China and emerging economies. Growth in China eased to 10.3% in the second quarter. Leading indicators suggest that China’s growth will slow to a moderate pace rather than a sharp correction.

In Australia, there was plenty of news to keep us interested. The Federal election in August left neither major party with a majority in the lower house. However, Prime Minister Julia Gillard was able to form a government with the support of Green and Independent MPs. Australian equities rebounded from the poor performance of the previous quarter. In August, most Australian companies reported on their results for the year ended 30 June 2010. Those results were mostly in line with expectations but management were more conservative on the outlook than expected.

Download a pdf version of this report: 2010.10.14-Quarterly-Economic-and-Market-Commentary