Market Update 22 July 2022 Investment markets and key developments over the past week Global sharemarkets have rallied again this week with US up 3.5%, Australia 2.9%, Europe 3.4%, Japan 3.8% while Chinese stocks are down by 0.3%. Positive gains in most sharemarkets recently after weeks of declines is leading to questions about whether we have seen the low in markets. Our view has not changed – we think the risk is of more downside …
Market Update 15 July 2022 Investment markets & key developments Share markets mostly fell over the last week on fears that still rising inflation will trigger faster rate hikes and recession. While Japanese shares rose, US, European and Chinese shares fell. The fall in Eurozone shares was magnified by the risk of a permanent shutdown of Russian gas flowing through the Nordstream 1 pipeline to Germany following a maintenance shutdown and another political crisis in …
In this Econosights we look at some of the current issues in the housing market, including the the expiration of fixed rate mortgages and the outook for residential construction… Econosights: Australian housing – impacts from the fixed rate mortgage “cliff” and risks to housing construction Key points A large chunk of home loans that have been recently fixed at ultra-low rates will roll onto a variable mortgage rate that is 2-3 times higher. This is …
Inflation in the 70s – baby boomer fantasy or nightmare? Why central banks must focus on getting inflation back down Key points The high inflation of the 1970s was bad for economies and bad for investment returns. The long-term downtrend in inflation and interest rates is likely over removing a tailwind for investment returns. But a return to sustained 1970’s levels of inflation appears unlikely. Introduction I grew up in the 1970s and it …
Market Update 8 July 2022 Investment markets & key developments Share markets mostly rose over the last week on hopes that central banks will be able to tame inflation without causing a recession. However, it was messy with Eurozone shares – where the risk of recession is greatest – first making a new bear market low earlier in the week. Australian shares followed the global lead higher with very strong gains in IT, consumer …
2021-22 saw poor investment returns – the bad news and the good Key points 2021-22 was a rough year for investors as high inflation, rising interest rates and recession fears impacted. Shares could still fall further as interest rates continue to rise and recession risks are high. However, inflation pressures are showing some signs of easing which may take pressure off central banks from later this year. Some key things for investors to keep …
Market Update 1 July 2022 Investment markets & key developments Recession fears dominated over the last week pushing US, European and Japanese shares down, although Chinese shares (having already had a 35% bear market) rose. Australian shares were little changed with gains in utilities, energy and industrials offset by falls in property, IT and telco shares. Recession fears also pushed down long-term bond yields, oil prices and metal prices with the iron ore price …
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 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 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 …
