US Hurricane Katrina is a devastation end to the month. 

While the economic impacts pale into insignificance compared to human suffering, the expectation is that Katrina will result in significant declines in employment, income and output from these American states in the short-term. As a result, economic growth could falter in the US for the remainder of the year. However the rebuilding phase should see growth rebound in 2006.

Falling $A boots returns from international equities.

International share markets were subdued in August after rising strongly the previous month. While the index return was flat, the $A fell significantly against international currencies boosting unhedged returns to 1.9% (MSCI World Ex Australia – net dividend). The Energy sector continued to perform strongly up 5.0% due to the rising oil price.

Australian share market continues its stellar run.

The S&P/ASX 300 Accumulation Index rose 2.0% in August. The Australian market was dominated by the reporting season for earnings to the end of June, which were generally better than expected. In particular, the Resources sector reported net profit after tax up 82% on the back of surging commodity prices and stronger demand. Many analysts noted that earnings from Resources companies have been produced at what could be the peak in the commodity cycle.

International fixed interest markets back in positive territory.

Concerns about US and global growth in response to Hurricane Katrina, rising oil prices and weak economic data saw a turnaround in the fortunes of international fixed interest markets after a brief set back in July. Unexpected falls in long-term yields pushed the hedged index up 1.2% for August.

Emerging markets keep delivering.

The MSCI Emerging Markets Index was up 2.1% in $A terms in August. Over the past three months, this asset class has risen 12.6% and new flows continue to buoy emerging markets as investors seek the potential for higher returns.