Contrary to popular belief, September tends to be the most volatile month in the calendar year and true to form we’re seeing volatility pick up, led by equities and currency falls in emerging markets.
Argentina and Turkey continue to face economic crises, with Argentine officials this week holding talks with the IMF to speed up the release of a $50bn loan to help its ailing economy.
Emerging markets currencies have now fallen about 8 per cent against the US dollar this year, while adding to the pain this September are looming US rate rises and the ongoing China-US trade war.
Economic & Market Commentary
Market Insights
13 Aug 2018
Last week certainly was one to forget for crypto traders who were hit by heavy declines on almost all major coins. The Bitcoin price fell to US$6,142.07 and the Ethereum price plunged to US$318.07.
A rejection of the Winklevoss Twins’ bitcoin exchange-traded fund (ETF) and a delay in a US Securities and Exchange Commission (SEC) decision on the VanEck ETF weighed heavily on the market. There was also a Bloomberg intelligence analyst warning that Bitcoin was in “dump mode”.
30 Jul 2018
The reign of the so-called FAANGs (Facebook, Apple, Amazon, Netflix and Google) has made way for MAGA (Microsoft, Apple, Google and Amazon), the new acronym for the narrower group of technology companies taking the market higher.
This shift was already in the making before the large fall in Facebook’s share price and started with the Cambridge Analytica/Russian manipulation incidents. Meanwhile, Netflix lost its mojo when it reported a shortfall in subscriber growth. It has also had no hit television shows/movies recently.
16 Jul 2018
It was a big week for US equities. The Nasdaq hit record highs on Friday and the SP500 reached five-month highs even though financial stocks were weak due to poorly received earnings from some major banks. The financials were offset by a stronger energy sector as oil prices continued to recover from an earlier sell off.
The rise in US equities may be justified as the market forms the belief that the US has less to lose from the implementation of more tariffs than many other countries. Even so, US multinationals could be hit hard if it becomes tougher for them to operate in international markets. This could also take the shine off US tech companies, which have been leading the charge in the equity market.
18 Jun 2018
This week, the US-China trade battle continued to escalate with the US deciding to apply a 25 per cent tariff on $34 billion worth of Chinese goods from July 6.
21 May 2018
It’s been a quiet week in markets. Apart from the Raiz Invest Limited priority offer opening, the biggest news is the rise in Brent Oil which went above $80 a barrel. This was driven by increased political tensions between the US and Iran, as well as worsening conditions in Venezuela.
Not surprisingly, energy has been the best performing sector of MSCI’s World Index of developed market equities since the price of oil began to climb in late June last year. Brent crude has nearly doubled since then, from around $45 a barrel to roughly $80 a barrel.
07 May 2018
Interest rates and the US Dollar have been the focus this past week, but let’s first look at Australia. The rise in Australia’s trade surplus rose from $1.3 billion to $1.5 billion in March left it at its highest level in a year.
This is significant because whilst most other major economies have slowed in the first quarter, international trade figures for March suggest that the Australian economy strengthened.
The release this week of Australia’s retail sales data for March and consumer confidence figures for April will likely provide further evidence that the Australian economy performed well at the start of the year.
23 Apr 2018
Markets are getting interesting again. In particular, we’ve got our eye on US Treasury Bond yields, tech stocks and commodities.
Back in February, the yield on 10-year US Treasury Bonds started to fall from its four-year high of almost 3.0%. By early April it had reached its low of 2.7%. It led to claims that its cycle had peaked. Not so. On Friday, the yield rebounded to 2.96%.
We’re pretty sure we know why. The recent rally was probably prompted by the realities of increasing “trade war” tensions, a growing US fiscal deficit, less demand for Treasuries from foreign investors and a reduction in the Fed’s holdings.
09 Apr 2018
These past two weeks, markets have remained focused on tech stocks and the potential of a trade war between the US and China. The good news for investors in Australia is that the level of volatility being experienced in US equities is not being felt to the same extent here. This is largely due to the lack of a dominant tech sector.
26 Mar 2018
With Trump at the helm of the world’s most powerful nation, you just never know where things will head next. The twists, turns, humps and bumps of his term in office keep everyone on their toes –markets included. Investors are now accustomed to the fact that the direction of markets is largely set by the direction of Trump’s proverbial rollercoaster – now in full and glorious flight.
Uncertainty over Trump’s behaviour and the state of US politics is driving mounting anxiety amongst market participants. Indeed, US stocks had their worst week in more than two years in response to political turmoil in the White House combined with concern around the effects of a trade war on global economic expansion.
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