News & Insights
Here you’ll find our thinking and helpful insights on the latest developments in domestic and global markets.
Investment and Economic Snapshot – 2021 Year in Review
The global economy continued to recover throughout 2021 courtesy of an ultra-low interest rate environment and a slow but steady vaccination roll out.
There are several known risks on the horizon, including a persistent pandemic and the prospect of higher for longer inflation, but we are cautiously optimistic about the prospects for the year ahead. Monetary policy is still highly accommodative, savings rates are high, corporate balance sheets are strong, and confidence is returning. Lower returns and higher volatility however will be features of the year ahead.
Global Equities Update - December 2021
November was a weaker month for global equities, marking the second negative month since this rally began in early 2020. Encouragingly, if there is no steep sell off or a further decline in December, the quarter should be positive – marking the seventh consecutive quarter that global equities have advanced since March 2020.
The month was very eventful with a number of key themes: a surge of COVID cases in Europe and subsequently new lockdowns and restrictions announced, Jerome Powell re-nominated as the Chair of the US Federal Reserve, and the annual rate of inflation in the US hitting 6.2% – the highest increase since 1990.
Watch time: 2:40 mins
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.
Global Equities Update – October 2021
Looking back on global equities in September, the month certainly lived up to its reputation of historically being a weaker month for global markets. The markets sold off a little more than 4% - breaking a seven month winning streak for global equities.
All sectors fell during the month, except for energy. This was due to a very strong supply and demand mismatch. This resulted in the energy sector rising almost 10%.
The US Fed Reserve announced that it would begin tapering. Other countries around the world, including Australia, also announced that they would be forecasting or starting to reduce their bond purchasing programs.
The market was focused on China in September - a market that materially has underperformed in 2021. The headlines were fixated on Evergrande, China’s third largest property developer, and whether it could meet its interest payments on its outstanding loans.
Watch time: 4:29 mins
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.
Global Equities Update – September 2021
Recapping the month in global markets, global equities rose 2.5% in August. This is now the seventh consecutive month that global equities have risen.
The three key market themes to watch this month are: the US Federal Reserve tapering, the spike in COVID cases and vaccine efficacy fading over time, as well as China and its slowing economy.
Looking ahead, investors are hoping the current “Goldilocks” situation - the economy is not too hot or too cold but just right – continues.
Watch time: 3:42 mins
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.
Global Equites Update – August 2021
For the sixth consecutive month, global equities were up in July, rising 0.7% and extending the broad rally witnessed over the past few months.
The most noteworthy news for July was the stringent new regulations issued by the Chinese government for the private education industry. The new rules included banning companies from profiting from teaching core subjects offered in the state schooling system or running classes on weekends. The change resulted in a massive fall in the shares of Chinese private education companies, with some falling as much as 80% in a few trading days. This regulatory crackdown now has investors questioning what other sectors might be next.
Looking forward, the focus turns towards the US earnings season, with companies reporting their current business trends, as well as earnings and profits. This provides a good gauge as to which businesses will continue to grow post COVID tailwinds, as well as providing insights into the various pressures currently being faced by businesses.
Watch time: 4.47 min
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.
Global Equities Update – July 2021
In June, we saw global equities up 1.5%. This was the fifth consecutive month that shares have risen in value globally. Year to date, markets have risen 12.5%, and are 90% higher than the lows witnessed in March 2020. The markets remain focused on inflation, interest rates and also on the speed of the global economy reopening with the Delta variant of COVID-19 bringing uncertainty.
Watch time: 4:51 mins
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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Global Equities Update – June 2021
In May, the global equities market was higher again, up 1.6% and up 11% for 2021. The market continues to be focused on inflation, with current debate as to whether it will be enduring or transitory. While it is difficult to predict, T. Rowe Price Portfolio Specialist Sam Ruiz, acknowledges that there will be a lot of supply shocks as the world returns to normal and that the pathway remains uncertain.
Watch time: 5:05 mins
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.
Global Equities Update – May 2021
Reflecting on the previous month, markets performed well again in April – up 4% for the month and 9% YTD. The market is currently focused on those stocks that had tailwinds from COVID – which ones will accelerate and which will decelerate e.g. Netflix. Looking forward, a number of uncertainties still remain as we see a resurgence of the virus in parts of the world and what that means for positioning in developed vs. emerging markets. Will we actually see a synchronised global recovery?
Watch time: 3:26 mins
Global Equities Update – April 2021
T. Rowe Price Portfolio Specialist Sam Ruiz shares with us his views on the market this month and explores the current key themes: inflation, interest rates and predicted US growth.
Watch time: 3:18 mins
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.
Global Equities Update - March 2021
T. Rowe Price Portfolio Specialist Sam Ruiz shares with us his current views on the market, and explores the three themes in the market at the moment: earnings, the virus and interest rates.
Watch time: 3:16 mins