INVESTMENT UPDATES

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February 17, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Australian corporate (semi-annual) earnings reporting season is now underway, with over a third of companies having reported and showing an average or negative 0.27%, according to Bloomberg.

  • Overseas reporting has been similarly lacklustre with Europe and the US in the low range of 0-2% and Japan recording negative 7.8% on average.

  • Australian growth looks set to decline sharply at the end of this financial year and turn negative in 2021. US, Europe & Japan earnings growth is forecast to accelerate into the end of 2020 and beyond.

  • Market is anticipating the effect of the Coronavirus to be short-lived as authorities start to contain and handle it.

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February 10, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Some positive data last week highlighted the positive start and momentum in the global economy, which was seen with the positive start on share markets.

  • The Coronavirus set to continue to weigh heavily on the global market outlook for the next few months.

  • Stimulus measures in China and positive employment in the US were also welcomed by the markets.

  • Australia is facing a number of headwinds with the ongoing drought, bushfire's impact and terrible production conditions in rural areas. Despite this, the RBA made it clear last week that there were no planned interest rate cuts on the horizon.

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February 3, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The Novel Coronavirus remains the dominant market theme. The Australian market is expected to be lower today off the back of Wall Street weakness and growing fears.

  • Europe and the US Gross Domestic Product (GDP) was on the soft side for last quarter. Technology company earnings continue to be the most positive global equities driver, with the impact of the virus being very hard to assess. 

  • The US Federal Reserve and Bank of England left rates on hold last week, but the Fed gave some insight into the outlook for the balance sheet. US interest rate cut expectations are building for later in the year.

  • The UK officially left the EU on Friday, with a one-year window to conclude a free trade agreement. The market forecasts may yet prove to be optimistic.

  • The RBA meets this week. With no change to interest rates expected.

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January 28, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Markets are in “risk-off” mode as the number of reported coronavirus cases continues to rise (S&P500 shed 0.9% at the close on Friday and the ASX futures indicating a weaker open today).

  • This week, we compare the current outbreak to the SARS epidemic of 2002.

  • The virus has dominated short-term market price action with volatility expected to increase in the short-term, but there is plenty of micro and macro news flow to preoccupy investors this week. The Fed and Bank of England will meet, with the UK's decision very much “alive” ahead of the UK’s official departure from the European Union on Friday. Australian Q4 CPI and other data will also be released.

  • Globally, well over a hundred companies will also be reporting earnings, including a number of major US companies.

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January 20, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Market earnings expectations are on the rise. But stock markets were outpaced by property and infrastructure last week, as bond yields and inflation expectations fell, and even as the US and China concluded the first phase of their trade agreement.

  • There is an apparent contradiction between higher equity market expectations and lower bond yields, that will have to be resolved. It may be that low global yields and central banks are pulling US yields lower than they would otherwise be.

  • Trade policy will remain on the agenda this week as the World Economic Forum takes place in Davos.

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January 13, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  •  Last week was again dominated by the bushfire crisis in Australia.

  • The escalation of tensions between the US and Iran Tensions appear to have receded, for now, but not before the gold price spiked above US$1,600, the Australian 10yr bond rate hit a low and the Australian dollar dipped to 0.6850 US$.

  • This week, we summarise the initial estimates of the impact of the bushfires on Australia and discuss the recent local and international data, highlighting the differing likely implications for earnings and asset prices.

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