National property prices fall for the first time since the pandemic – expect a 10-15% top to bottom fall Key points Australian home prices fell 0.1% in May, their first decline since the pandemic. The main drivers behind the downturn are: poor affordability with prices up nearly 29% over 21 months; rising mortgage rates; a rotation in spending away from housing; and a decline in home buyer confidence. We continue to expect a 10-15% fall …
The RBA starts raising rates – how far and how fast? And what does it mean for investors? Key points The RBA has hiked the cash rate by 0.25% taking it to 0.35% and signalling more rate hikes ahead. We expect the cash rate to rise to 1.5% by year-end and to 2% by mid next year. But the RBA will only raise rates as far as necessary to cool inflation and high household debt …
The 2022 Australian Federal election and investors Key points Australian election campaigns tend to result in a period of uncertainty which have seen weak gains on average for shares followed by a bounce once it’s out of the way. Labor is not offering a significantly different economic policy agenda than the Coalition. With the exception of climate policies, it’s hard to see a significant impact on investment markets from a change in government. A bigger …
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: Four reasons to expect a softer US economy in 2022 Key points The US economy is facing numerous headwinds in 2022 which will slow US economic growth. Inflation is too high, interest rates are going to rise, the value of the Fed’s balance sheet will fall and fiscal “thrust” has turned negative. These factors are also leading to a peak in earnings growth. We expect lower equity returns in the US market in 2022 …
Why is Australian housing so expensive and what can be done to improve housing affordability? Key Points The key drivers of poor housing affordability and high household debt levels in Australia have been low rates and poor housing supply. Macro prudential controls to slow home lending now look imminent. But this is just a cyclical measure. More fundamental measures to improve housing affordability need to focus on boosting housing supply and decentralising away from …
Five reasons why the Australian dollar is likely to resume its upswing over the next 12 months Key Points Since its February high of around $US0.80 the $A the $A has fallen on the back of global growth concerns, a slowdown in China and the Delta outbreak in Australia. However, there is good reason to expect the $A to resume its rising trend: sentiment towards the $A is negative; global growth is likely to …
Shares have had a very strong rebound since March last year so where are we in the investment cycle? Key points The history of cyclical bull markets in shares suggests that the rebound since last March still has a way to go. But it’s normal for the second 12 months of a cyclical bull market to see slower returns from shares. While shares are vulnerable to a further correction triggered by the spike in …
Joe Biden on track to become US president – implications for investors and Australia Key points The US election has been close and final counting as well as legal challenges could still upset the result, but the now highly likely outcome is a Biden Presidency. While there is a possibility that the Democrats could win control of the Senate via runoff elections in Georgia, the most likely outcome is that Democrats will retain control …
