As another financial year comes to a close it was another year in which investors were rewarded for investing in growth assets. Australian shares returned 14.1%, International shares 14.7% and infrastructure 12.4%. On the other hand cash was 1.8% and Australian fixed interest returned 0.2%

Over the past year the American economy has found a new gear. For more than seven years the recovery proceeded at a lacklustre pace, propped up mainly by a resilient consumer. More recently, business- and industrial-focused areas have provided positive momentum to the overall growth picture. The Purchasing Managers’ Index (PMI), a measure of manufacturing activity, recently rose to 52.7, indicating expansionary conditions. In addition, corporate profits, which came under pressure in 2015 and 2016, have rebounded, surging more than 13% in the first quarter. Taken in combination with strengthening wage growth and retail sales, these conditions point to accelerating growth in the second half.

European equities
are now showing signs of recovery after concerns around political risk, which have weighed on returns over the last year, have eased following anti-EU party defeats in Dutch and French elections this year. However, there continue to be risks around the rise of populist sentiment. The improvement in the euro-zone’s growth rate has been broad-based and supported by several factors. It is the beneficiary of a sharp improvement in global economic activity, particularly in the U.S. and China

Japan’s Tankan business conditions survey improved a bit more than expected and points to ongoing reasonable economic growth.

Chinese business conditions PMIs mostly rose in June consistent with a stabilisation or modest improvement in growth after a modest slowing.

Australian data was mostly on the strong side.
 The Australian Industry Group's business conditions PMIs were solid in June, retail sales rose nicely for the second month in a row in May pointing to solid consumer spending in the June quarter, the ANZ job ads survey remained strong pointing to solid jobs growth and the trade surplus rebounded in May as coal exports recovered after the impact of Cyclone Debbie and gas exports rose strongly as LNG projects complete. However, it would be wrong to break out the champagne just yet as building approvals fell sharply in May confirming that home building activity is set to slow and low wages, high underemployment and the July surge in power prices will weigh on consumer spending going forward. In other data, home prices bounced back in June after seasonal weakness in May but momentum in Sydney and Melbourne is continuing to slow and the Melbourne Institute's Inflation Gauge showed continuing benign inflation.

Shares are vulnerable to a further short term setback
 as we go through the seasonally weak September quarter with the back up in bond yields on central bank exit talk looking like it has further go and risks remaining around President Trump and North Korea. However, valuations remain mostly okay, global monetary conditions are set to remain easy and profits are improving on the back of stronger global growth, so we continue to see the broad 6-12 month trend in shares remaining up. Australian shares are likely to end the year higher but will likely remain relative underperformers compared to global shares.

Low yields and a gradual uptrend in them point to low returns from sovereign bonds.

National residential property price gains are expected to slow,
as the heat comes out of Sydney and Melbourne. Perth and Darwin are near the bottom and other capitals are likely to see moderate growth.

Cash and bank deposits are likely to continue to provide poor returns, with term deposit rates running around 2.5%.