News & Insights
Here you’ll find our thinking and helpful insights on the latest developments in domestic and global markets.
Investment and Economic Snapshot November 2021
Financial markets contracted in the final days of the month after the discovery of the new COVID-19 variant Omicron, reached Australian shores. The volatility index shot higher as market fears took hold, resulting in intense selling pressure of risk assets in the final days of the month both in Australia and overseas.
Investment and Economic Snapshot October 2021
Throughout the month, further evidence surfaced suggesting that Australia’s economic recovery is on track and is quickly gaining momentum. Investor and consumer confidence continued to rise, buoyed by promising vaccine statistics, and a gradual easing of lockdown restrictions.
Investment and Economic Snapshot September 2021
The big news for markets in September was the announcement by the Fed that their tapering program would begin around the end of the year. This pushed real yields higher by around 20bps and sent the US 10-year government bond yield towards 1.50%. Here in Australia, the Reserve Bank of Australia was a little more dovish due to the continued impact from lockdowns, stating they would delay the review of the current bond purchase program until their February 1 2022 meeting. As a result, our 10-year bond yields rose, but at a slower pace than the US, finishing the month up 14bps.
Economic Snapshot August 2021
August saw more of the same themes and risks that global financial markets had focused on in July. COVID-19 continued to spread around the world, leading to further slowing of economic activity, disruptions to global supply chains, and pockets of inflationary pressures.
Economic Snapshot July 2021
July saw markets continue to worry about the global growth profile. Some key readings of economic activity in June were lower than in previous months, leading markets to revisit the “peak growth theme”. Potential disruption from the accelerating COVID-19 waves around the world added to these concerns. This narrative outweighed some stronger than expected inflation figures.
Economic Snapshot June 2021 – Year in Review
FY2020/21 was a dramatic year that started with serious concerns about public health and the global economy and finished on an optimistic note, delivering historic gains in equity markets along the way. Although COVID-19 continued to cause problems in many countries through the year, progress on developing and distributing vaccines helped mitigate concerns about the impact of further lockdowns. Most importantly, however, the massive fiscal and monetary stimulus applied across the world raised expectations of economic recovery.
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Economic Snapshot May 2021
May was a month of consolidation for most asset classes. Global investors have been grappling with the trade-off between the benefits of stronger global growth for corporate profits and the potential cost to bonds from higher inflation that might flow from the stronger growth.
Economic Snapshot April 2021
April saw positive returns across the board for financial markets. Equities and commodities performed especially well. Bond markets steadied in April, after their fears in previous months about the risk of inflation stemming from the robust pace of economic recovery. Data showing softer than expected March quarter inflation in Australia helped the local bond market. The better performance of the bond markets provided a good backdrop for equity markets in April. Bond-sensitive equities such as REITs did well, while the broader US equity market was supported by a solid company earnings reporting season. The US equity market reached new highs, but the Japanese market declined as a renewed COVID-19 wave saw the reimposition of lockdowns. The emerging equity markets index rallied, despite the weakness of the Indian equity market which was also caused by COVID-19 developments there.
Economic Snapshot March 2021
March saw further good news about the pace of global economic recovery, with the OECD revising up its forecasts for global growth, and strong employment and growth figures reported in both Australia and the US. Financial markets received the better news on growth with mixed feelings. Their concern is that the US economy will start to overheat sooner than expected, leading to higher inflation and tighter monetary policy.
Market Watch February 2021
Three major themes to watch this month: inflation, currency, and the speed and success of the COVID-19 vaccine rollout.
Economic Snapshot February 2021
February was a re-run of January in that markets started on a strong note, with equities posting very good gains in the first half of the month, only for conditions to reverse later in the month. However, while online trading caused the volatility in January, it was the bond market that caused the trouble in February.
Economic Snapshot January 2021
January saw further improvement in the Australian economy, with higher employment and stronger business conditions and consumer confidence. Inflation rose only modestly in the December quarter to around1% in annual terms. This is well below there serve Bank’s 2-3% target range. Economic activity in the US and Europe is showing the impact of new lockdowns to curb the spread of the latest strains of COVID-19. There are fears of a double-dip recession in Europe.
Economic Snapshot December YIR 2020
2020 began off the back of a big global equity rally, with a few geo-political concerns, but no inkling of the havoc that COVID-19 was about to wreak on the world. As the March quarter unfolded, with lockdowns following the virus from one country to another, risk assets succahs equities and the A$ fell sharply as expectations of recession spiked. At the sometime, a shortage of US$ liquidity pushed financial markets close to freezing up. Central banks and governments stepped in with massive liquidity and spending packages. Interest rates were cuts to historic lows.
Economic Snapshot November 2020
November was a massive month for global financial markets. Two of the biggest uncertainties facing the markets were resolved in ways which led global investors to become much more bullish about the outlook as we move out of 2020 and into 2021. First, the US election is now out of the way and Joe Biden has beaten Donald Trump for the White House. The markets no longer need to fear a contested election. Second, the news of successful vaccines for COVID-19 marked a sea-change in investor sentiment, even though big waves of the virus are rolling through Europe and the US. These factors, plus the prospect of further policy support, triggered a big risk-on move in financial markets.
Economic Snapshot October 2020
A major resurgence of COVID-19 infections in the UK, Europe and US has renewed investor concerns about the path of global economic recovery. In Europe in particular, there is talk of a double-dip recession. This, plus increasing uncertainty about the US election outcome, and the chances of getting a big new fiscal package through Congress, undermined global equity markets in October.
Economic Snapshot September 2020
September saw a break in the rally in global equity markets. Several factors contributed to this, including signs that the global recovery, while proceeding, is nevertheless slowing down. Growing concerns about prospects for fiscal stimulus in the US added to the volatility, as did reports that Japanese firm Softbank had purchased billions of dollars of equity options, driving tech stocks up on speculative positions.
Economic Snapshot August 2020
August saw restrictions maintained in a number of countries to contain second waves of COVID-19. Progress was made in Australia and the US in reducing infection rates, but the US still has a long way to go before they really get the virus under control. Europe is in the grip of a significant second wave. The most affected countries include Spain and France, both of which now have infection rates exceeding those in their first waves.
Economic Snapshot July 2020
July saw second waves of COVID-19 infections around the world with cases per week in a number of countries, including Australia, the US and Japan, exceeding previous peaks. Some countries have responded by reinstating national restrictions, while others, including Australia, have adopted a regional approach. Employment and consumer confidence are starting to feel the consequences of this, as are budget deficits which will expand even further as more support to firms and households is required to mitigate the impact on labour markets and consumer spending.
Economic Snapshot June 2020
2019/20 was most dramatic year for financial markets since the GFC. The first half of the year was dominated by concerns of global recession as slower growth in China spilled over into the rest of the world. Central banks cut cash rates even further, which encouraged equity markets to rally into December. The ongoing popularity of tech stocks helped underpin the rally. However, equity market valuations closed 2019 in expensive territory.