Investment Update – October 2019

Spring 2019 sees us reflecting on a period of positive returns for most investors, with decent returns delivered by share and property markets here and overseas. This is in spite of a number of headwinds and risks.

Both the Reserve Bank of Australia (RBA) and the US Federal Reserve have recently cut interest rates in order to deliver stimulus to their local economies. In Australia, we have now had three cuts for the year, with the official cash rate now at 0.75%. The RBA cited concerns of weak local and global growth, as well as concern over the soft property market. In the US, the reduction has been to some extend an unwinding of previous rate rises, in order to keep the economy healthy in the face of trade wars and general sluggishness. These cuts have been well received, with markets continuing this year’s general upward trend.
In Europe, manufacturing data is showing signs of weakness, suggesting Germany in particular is suffering the fallout of the US/China trade wars, due to their large share of exports to China.

Economic Outlook: 27 September 2019
Overall the outlook is for continued modest growth. Ongoing trade war concerns are affecting global growth forecasts. The political environment is continuing to affect markets and increase volatility: for instance, the Trump impeachment inquiry is gaining some momentum, and in the UK & Europe the deadline for a Brexit deal is causing some uncertainty. Low interest rates globally continue to be somewhat supportive of growth, and in Australia there are signs that major property markets may have turned the corner, with increased auction clearance rates.

 
Economic indicators –  28 June 2019 1 year % excluding dividends
Australia: ASX 200 8.7%
Japan: Topix -10.9%
China: CSI 300 13.2%
UK: FTSE 100 -1.6%
US: S&P 500 1.6%
Australia: Rates at 27 September 2019  
AUD/USD 0.70
Official interest rates 0.75%
Aus 10-year bond yield 1.0%
 

 

 


Published : 07 Oct 2019