INVESTMENT UPDATES

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November 11, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • Recession fears have fallen, pushing equity markets higher and weighing on yield-sensitive sectors, such as Property, infrastructure and the Australian banks.

  • Australian Banks trimmed their forecasts and reported much softer earnings, which weighed on our market.

  • The slope of the yield curves continues to indicate much weaker growth than suggested by mid-2018 curves. Equity markets are rising more as a result of multiple expansion than earnings growth, save for Asia and Emerging Markets (EM).

  • Economic and employment data due this week provides a chance to verify that outlook.

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November 4, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • Has the US Fed done enough? The Federal Reserve cut interest rates by a quarter-point last week, indicating an intention to stay on hold for now.

  • US-China trade tensions return as the APEC gathering in Chile is canceled, due to civil unrest.

  • UK General Election called for 12th December.

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October 28, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • The EU grants an extension to the UK beyond 31st October, positive US-China trade headlines, and an expected rate cut from the Fed.

  • A range of equity indices are now trading close to the highs, despite low earnings growth, declining EPS forecasts and weakening coincident data.

  • Roughly 40% of S&P500 companies have thus far reported earnings for the third quarter. Earnings per share (EPS) growth is approximately 0.5% down on the second quarter according to Bloomberg. In Europe, earnings are down over 2%.

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October 21, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • IMF and World Bank meetings in Washington, took the opportunity to review the “big picture” outlook, the risks to global growth and earnings, and, unfortunately, why an acceleration in growth appears unlikely.
  • RBA confirmed it was supporting the housing market, and explained it had underestimated the fall in consumption that would follow from falling established house prices.
  • The Li Keqiang activity index indicates some stabilisation in the outlook for China.
  • Boris Johnson concluded a new deal with the EU which crucially transforms the new relationship from a customs union to a free trade agreement (FTA)...

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October 14, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • The White House agreed to a 'first phase' interim trade deal with China, despite the president having said he wouldn't.
  • The British government is now vigorously pursuing a deal with the EU, after Boris Johnson had said that the UK was prepared to leave without one.
  • The Federal Reserve began expanding its balance sheet by $60bn per month, after ending quantitative tightening only two months ago.

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October 7, 2019

WEEKLY INVESTMENT UPDATE

Key points:

  • Chinese Vice-Premier, Liu He, travels to Washington for the main event this week; the latest round of trade talks between the US and China. If no agreement is reached, higher tariffs on $250bn of Chinese imports will be applied next week. In the unlikely event that a deal is announced, we expect equity markets to be jubilant.
  • RBA Cut rates last week by 0.25% to record low.
  • RBA’s recent Financial Stability Report has a more dovish tone and explicit support for the housing market.
  • US labour report has worrisome leading indicators for wages and future employment. We expect further easing from the Fed and probably more Quantitative Easing (QE).

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