The good news in the plunge in markets – higher medium-term return potential (assuming inflation is tamed) | AMP Capital

The good news in the plunge in markets – higher medium-term return potential (assuming inflation is tamed) Key points The fall in bond and share values and rise in their investment yields on the back of higher inflation has seen our medium term (5 to 10 year) return projections for a diversified mix of assets rise to around 6.8% p.a. If inflation falls back to around 2.5% pa this suggests reasonable average returns ahead. The …

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 …

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 …

Jobs and inflation to trigger higher rates? | AMP Capital

Jobs and inflation to trigger higher rates?   The labour market is strong, with higher employment levels than pre-COVID, a record participation rate and a low unemployment rate of four per cent. Alongside increasing inflation, that’s enough trigger a rise in the official cash rate by the Reserve Bank of Australia (RBA), most likely when the RBA board meets on Tuesday (3 May). The pace of Australian jobs growth slowed last month, but that was …

Australian housing slowdown Q&A – What impact will higher interest rates have? How far will prices fall? | AMP Capital

Australian housing slowdown Q&A – What impact will higher interest rates have? How far will prices fall? Key Points Australian home prices are likely to fall by 10% to 15% into 2024 primarily as a result of poor affordability and rising interest rates. The negative wealth effect from falling home prices should help limit how much the RBA raises rates. A change in Government is unlikely to significantly affect the outlook for home prices, but …

Another energy shock and the threat from higher petrol prices | AMP Capital

Another energy shock and the threat from higher petrol prices Key Points Oil prices have spiked on the anticipation and now reality of restrictions on Russian oil supply from the war in Ukraine. This is driving a sharp rise in petrol prices which will hit household spending power. Fortunately, there is an offset in Australia from the boost to national income from higher energy prices and commodity prices generally and scope for the Federal Government …

Econosights: Inflation risks: implications from Russia/Ukraine war and the floods | AMP Capital

Econosights: Inflation risks: implications from Russia/Ukraine war and the floods Key points The Russia/Ukraine war is causing a big rise across many commodity prices including gas, oil, iron ore, coal and wheat. This will flow through to consumer prices. Flooding across the east coast of Australia will also put upward pressure on fruit and vegetable prices. We have revised our inflation forecasts higher to account for these impacts. We expect headline inflation to be just …

Econosights: How will households respond to higher interest rates? | AMP Capital

Econosights: How will households respond to higher interest rates?   Key points We think that the Reserve Bank of Australia will start to tighten interest rates at the end of 2022 (the RBA themselves think a rate hike will come in 2024 or possibly 2023). The last time the central bank hiked the cash rate was more than a decade ago. Falling interest rates over the past 20 years has led to a large decline …

Market Update 16 July | AMP Capital

Market Update 16 July   Investment markets and key developments over the past week Share markets were buffeted again by higher inflation and mixed messages from various central banks over the last week. While US and European shares fell slightly, Japanese, Chinese and Australian shares rose benefitting from the rally in US shares at the end of the previous week. The gain in Australian shares came despite bad news on lockdowns and was led by utility, …

Market Update 19 March 2021 | AMP Capital

Market Update 19 March 2021   Investment markets and key developments over the past week Global sharemarket performance continues to diverge. US shares started the week strongly but higher bond yields following the US Federal Reserve’s meeting led US shares down 0.7% over the week for the S&P500 with the heavier tech weighted NASDAQ even weaker (-1.5%). The theme of a rotation out of US to global shares continues to play out with European shares up …