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A disappointing year for global shares

Share markets began the year positively. However, in the December quarter market volatility pushed many markets into negative returns for the year. Australia’s market lost ground but outdid most major markets.

2018 year in the review - Infographic 1

S&P/ASX 200 Accumulation Index; S&P 500 Index; FTSE 100 Index; German Aktien Index (DAX); France CAC40 Index; Nikkei 225 Index; Hang Seng Index; Shanghai Composite Index; (all in local currency and unhedged).

Trade tensions worsened

JUN The US and China engaged in an escalating trade war, imposing tit-for-tat tariffs on each other’s imports.

DEC At the G20 summit, President Trump and President Jinping agreed to a 90-day ceasefire from 1 January 2019.

Global growth moderated over the year

Economic growth in China cooled:

  • Economic indicators suggest growth in China softened over the year.

Growth in European economies slowed:

  • Germany’s economy contracted by 0.2% in the third quarter, the first negative quarter in over three years.
  • Italy remained burdened by excessive debt, high unemployment and a weak banking system.
  • The uncertainty and political instability over Brexit took its toll on UK financial markets. The depreciation of the pound led to inflation rising above its 2% target.

The US economy had another year of strong growth:

  • Unemployment rate fell to 3.7% – a near 50-year low.
  • Average hourly wages grew 3.1%, the largest gain in nearly 10 years.
  • The Fed increased the target federal funds rate by 0.25% four times.

Another mixed report card for Australia’s economy1:

2018 year in the review - Infographic 2

Australian shares

Performance varied widely across industry sectors.

2018 year in the review - Infographic 3

Performance for the year ending 31 December 2018.
Sector returns are for the S&P/ASX 200 Accumulation GICS indices.

1. Figures as at 31 December 2018 unless otherwise stated. 2. Annual rate for the September quarter. 3. As at 31 November 2018.

Important information
This document has been reproduced with permission of MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (MLC), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230 686) group of companies (NAB Group), 105–153 Miller Street, North Sydney 2060. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information. Information in this publication is accurate as at the date of writing (15 January 2019). In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither Bank First, the Licensee nor any member of the NAB Group, nor their employees or directors give any warranty of accuracy, or accept any responsibility for errors or omissions in this document. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.