Profits fire, but fail to inspire markets

 In Australia, the average company profits were up 30.6% for the six months to 31 December 2005. In the , 484 of S&P 500 companies, which had reported by the end of February, delivered an average increase in profit of 15.4%. Returns in both markets were moderate as these higher profits had already been priced in.

Australian GDP rise lower than expected

GDP rose 0.5% in the fourth quarter (+2.7% yoy) below market expectations of a 0.7% rise (+3.0% yoy). This caused yields in the fixed interest markets to decline, with 3-Year yields finishing the month at 5.25%.

Japanese economic growth signals end to deflation

The broadest measure of Japanese economic activity, which includes consumer confidence and other economic indicators, rose to 80% from 54.5% in November 2005. Japanese wages had their largest rise in 18 months, signalling consumer spending may support growth and heralding an end to deflation.

Australian dollar falls, boosting unhedged returns

The Australian dollar declined against the US dollar (-1.8%), Japanese Yen (-2.8%) and the UK Pound (-0.3%).