Econosights: How are consumers responding to higher interest rates? | AMP Capital

Econosights: How are consumers responding to higher interest rates? Key points Consumers are responding to higher interest rates: housing market indicators are slowing (home price declines have accelerated and auction clearance rates are falling), consumer sentiment is weakening and retail spending is slowing. This is the expected consumer response as interest rates rise. The RBA wants to see slowing economic activity to reduce current inflation and inflation expectations. The concern is around too many rate …

Australia’s Achilles’ heel – high household debt and rising interest rates…it’s not as bad as it looks, but it’s still an issue | AMP Capital

Australia’s Achilles’ heel – high household debt and rising interest rates…it’s not as bad as it looks, but it’s still an issue   Key points Australian household debt has risen dramatically since the 1980s and is high compared to other countries. The rise is not as bad as it looks because it’s been matched by rising wealth and debt servicing problems are low. However, this will likely change as interest rates rise further & if …

Market Update 24 June 2022 | AMP Capital

Market Update 24 June 2022 Investment markets & key developments Share markets managed to stabilise and, in most major markets, bounce from oversold levels over the last week as there were no new hawkish surprises from central banks and weak economic data saw bond yields fall taking pressure of share market valuations despite increasing worries about recession. For the week (to date) US shares are up just over 3% and Australian shares rose by just …

Econosights: Global growth fears – are we heading into a recession? | AMP Capital

Econosights: Global growth fears – are we heading into a recession? Key points Global growth is slowing as fiscal and monetary policy are tightening. High inflation means that interest rates will be increased further from here. Recession indicators (an inversion in the US 2/10 year yield curve and the bear market in global shares) are showing increased odds of a recession in the next 12-18 months. We have lowered Australian GDP forecasts and now see …

The plunge in shares & flow on to super – key things for investors to keep in mind during times of market turmoil | AMP Capital

The plunge in shares & flow on to super – key things for investors to keep in mind during times of market turmoil Key points Share markets have fallen sharply in recent weeks continuing the plunge that started early this year due to worries about inflation, monetary tightening, recession & geopolitical issues including the invasion of Ukraine. It’s still too early to say markets have bottomed. This will weigh on super returns for this financial …

Market Update 17 June 2022 | AMP Capital

Market Update 17 June 2022 Investment markets & key developments Share markets tumbled again over the last week as markets moved to anticipate even more aggressive rate hikes from central banks after the release of higher than expected US inflation data. For the week (so far) global shares are down around 6% and Australian shares are down by around 7%. The fall in the Australian share market was led by IT stocks which have been under …

Market Update 10 June 2022 | AMP Capital

Market Update 10 June 2022 Investment markets and key developments over the past week Sharemarkets came under renewed downward pressure this week (after a few weeks of rallying). Themes of stagflation risks, heightened recession odds, hawkish central banks and questions as to whether inflation has peaked or not continue to be the main drivers of markets. US shares were down by 2.2% with the tech-heavy Nasdaq down by a similar am. Australian shares are 4% …

Econosights: Implications from Australia’s energy “crisis” | AMP Capital

Econosights: Implications from Australia’s energy “crisis” Key points Australian electricity and gas price increases will impact most consumers from 1 July 2022. We expect the increase in energy prices to add 1 percentage points to headline inflation. We now see headline inflation peaking at 7% in the September quarter and trimmed mean inflation peaking at 5.5% in the December quarter. There are no changes to our expectations for the cash rate from the lift in …

The RBA hikes rates again with more to go – but falling confidence and home prices will limit RBA tightening | AMP Capital

The RBA hikes rates again with more to go – but falling confidence and home prices will limit RBA tightening Key points The RBA has hiked the cash rate again – by 0.5% taking it to 0.85% and continues to signal more rate hikes ahead. We expect the cash rate to rise to 1.5-2% by year-end and to peak at 2-2.5% by mid next year. Greater sensitivity to higher interest rates will cap how much …

Econosights: China – lockdowns, policy stimulus and regulatory burdens | AMP Capital

Econosights: China – lockdowns, policy stimulus and regulatory burdens Key points There are reasons to be optimistic on China: lockdowns are easing which will help to abate supply-chain related inflation, policy stimulus measures have significantly ramped up and more can be done and geopolitical tensions have room to improve with the change of government in Australia and potential roll-back of US tariffs before the November mid-term election. Chinese shares have been hit hard in recent …