News & Insights
Here you’ll find our thinking and helpful insights on the latest developments in domestic and global markets.
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.
Economic Snapshot May 2020
Equity markets pushed higher in May, taking valuations to very expensive levels, as markets took an almost exclusively optimistic view of declining infection rates, reports of progress towards a vaccine and the benefits of economies re-opening. In addition, significant stimulus measures announced in previous months began to take effect, giving many investors’ confidence that government policy would provide a safety net against any further falls in markets.
Economic Snapshot April 2020
Markets embraced a risk-on mood in April with a strong rally in equities as investors welcomed declining virus infections and reports of possible medical treatments. Support from governments and central banks also helped. However, as the month went on, the economic data and corporate reporting painted a bleaker picture of just how much damage has been done to the world economy. Markets have priced in a lot of good news and now they are starting to see the bad news. Equity markets are looking expensive again after April’s rally, which does not leave much room for them to absorb bad news.
Economic Snapshot February 2020
The first three weeks of February saw further good performance by global equity markets. The news from China about Covid-19 seemed to be getting better and the latest economic data was still quite positive. However, all this changed very quickly from 21 February when markets suddenly became alarmed by reports of the virus spreading to a number of countries around the world, including Italy, Iran, South Korea and the US.
Economic Snapshot January 2020
January was a dramatic month for the world economy and financial markets, starting with hostilities between the US and Iran and ending with fears about the new coronavirus (2019- nCoV) from China. Here in Australia, we had the extra difficulties from the terrible bushfires. Despite all this, the Australian equity market had a great month, more than making up for a desultory December and outperforming global counterparts. The weaker $A and stronger performance from bonds helped our equity market, though more so in the non-resource sectors.