Venezuela tension heats up

By Wealth Know How in Commentary & Opinion

Forget the war of words taking placing over North Korea, eyes are turning to the crisis unfolding in Venezuela. That includes the eyes of President Trump who it seems wouldn’t rule out military intervention. This comes despite the US skipping the recent Lima meeting between 12 countries from the American continents, which gave the market the impression the US would take a back seat when it came to sorting out this crisis.
 
Venezuela is a country rich in oil which exports mainly to the US. Any disruption to that supply will prompt the price of oil to rally globally and affect the share price of energy companies.
 

Aussie dollar surprises market

By Wealth Know How in Commentary & Opinion

The Australian dollar’s strong rally in recent weeks has caught the market by surprise.  It could even push higher – even maybe hitting US$0.85. That’s a big jump when it was just US$0.74 back at the start of June.
 
The strength of the currency reflects some main factors:
 
Like an increasing chance of a rate rise in Australia on the back of economic strength. Saying that, we don’t expect the Reserve Bank of Australia to hike rates soon. Also, global growth continues to be resilient which supports the China story. China has released some unexpectedly upbeat data, which has prompted an increase in the price of industrial metals.
 
Even with weaker-than-expected inflation numbers in Australia the dollar has still been strong.
 
How long the Australian Dollar will be strong for is still to be seen. The Chinese economy may lose some momentum in the second half of the year, which could affect our currency.
 
At the end of the day, it will be the strength of industrial commodities like Oil and Iron Ore which will drive the direction of the Australian dollar.
 
Speaking of oil, the price continues to rally driven by large falls in US crude and gasoline stock, as well as a pick-up in demand. The weakness of the US Dollar against major currencies is also aiding the oil price.
 
Current geo-political risks including issues in Venezuela, the proxy war in Yemen - between Iran & Saudi Arabia - and the problem of North Korea could also add fuel to the rally in the price of oil.
 
Equity markets, however, will remain on a cautious footing as technology stocks retreat and US wage growth softens.
 
The latest sell-off in tech stocks has made for dramatic headlines, comparable with the dot com collapse. However, unlike back then, the key difference is that the recent strength appears to be justified by improved earnings – both actual and projected.   This contrasts with the hype of the dot com era which was based on projected earnings alone
 
Finally, a word on emerging market equities which have continued to rise recently. Despite the gains, valuation levels still appear quite low compared to developed market equities. Further rises in valuations and earnings should help emerging market equities to keep on climbing.  Not necessarily at the pace they have done so far in 2017.

Watershed moment for China

By Wealth Know How in Commentary & Opinion

The growing acceptance of China in international capital markets faces a watershed moment this week with a decision on whether a group of stocks listed on its $7 trillion domestic equity market will be included in the world's dominant emerging markets stock index – MSCI.
 
Inclusion in the index would confer recognition of China's domestic markets and oblige funds from all over the world to pour billions of dollars into the country's stocks.
 
Opinion is divided on whether MSCI will grant inclusion. In each of the past three years, the company has debated inclusion with index users only to reject it citing market access obstacles and governance issues. 

Market climbs wall of worry

By Wealth Know How in Commentary & Opinion

Popular opinion may be on a downer, but equity markets continue to rise. The US, Germany and the UK all reached record highs last week. Even Japan closed out above 20,000, which hasn’t been seen since Dec 2015.
 
It may be an unloved rally but we believe the market will continue to climb the wall of worry for the rest of the year.
 
In Australia sentiment amongst retail investors is low. There is a lot of negative news about the banks off the back of the bank levy, as well as concern for the resources sector in light of additional taxes on major miners such as BHP and RIO.
 
But when retail investors are negative, it’s usually a sign that the market is about to turn and begin to rally.

Trump ups political risk

By Wealth Know How in Commentary & Opinion

Offshore equity markets have recovered quickly since last Wednesday’s sell-off which was prompted by growing fears that US President Trump would be impeached. Markets aren’t concerned with the impeachment itself, but rather what would happen to the re-inflation policy if Trump wasn’t President anymore.
 
Over the weekend, more news stories have come out on Trump’s actions. The speed of the stories means that we are likely to hear more over the coming weeks.

Aussie dollar to weaken

By Wealth Know How in Commentary & Opinion

The Aussie dollar is likely to remain under pressure for the time being as commodity prices continue to fall and Australia’s interest rate premium narrows.
 
The price of Australia’s main commodity exports iron ore and coal have a strong influence on the value of the Australian dollar. Recently, iron ore prices have fallen to about $65 a tonne – a big drop compared to the $90 a tonne they reached late last year and earlier this year.
 
Even when pricing hit $90, the Australian dollar didn’t get much above 75 cents. This doesn’t paint a strengthening outlook for the Australian Dollar in the current environment.  

French election bumps Euro higher

By Wealth Know How in Commentary & Opinion

After a nail-biting campaign, the first-round of voting in the French Presidential election took place over the weekend.  The centrist Emmanuel Macron and euro-sceptic Marine Le Pen winning the most votes.
 
The French people will now be choosing between two radically different visions for the country in the second round of voting on the 7^th of May.
 
If Macron wins, he will be the first independent President of the Republic in France. This would delight France’s EU partners and reassure investors. This is the most likely outcome, but anything is possible.
 
The world economy looks like it should expand at a healthy pace over the next two years if the latest forecasts from the International Monetary Fund are anything to go by.
 

Syrian missile strike shakes markets

By Wealth Know How in Commentary & Opinion

The decision by Trump to carry out the air strike raises questions about his wider foreign policy intentions. He has previously signalled a desire to pull out of conflicts in the middle east.
 
However, market fears subsided quickly, and turned their attention to the US economy.  At first glance the US employment report appeared disappointing falling far short of expectations.

Countdown to Brexit kicks off

By Wealth Know How in Commentary & Opinion

Get ready for a fun week ahead as the UK is set to trigger Article 50 which will bring Brexit another step closer to reality. Article 50 starts the countdown to the UK’s exit as they enter two years of negotiations with the EU.
 
We doubt the notification itself will trigger any sharp falls, but markets will no doubt be keeping a close eye on the negotiations over the coming months.

Odds strengthen that US will hike rates

By Wealth Know How in Commentary & Opinion

Rates look almost certain to rise in the US this week after the release of strong February employment data.
 
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
 
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.

Dow Jones on winning streak

By Wealth Know How in Commentary & Opinion

The market is awash with talk this week of the 12th consecutive rise of the Dow Jones Industrial Average. The last time the bellwether indices of US equities had a longer "winning streak" was in 1987.
 
But it’s not just the DJIA that’s powering ahead. Global equity markets are also posting record highs. Bulls have taken heart from promises made by US President Donald Trump regarding fiscal stimulus, infrastructure spending and deregulation.

Trump’s tax promises boost markets

By Wealth Know How in Commentary & Opinion

Equity markets, the US Dollar and commodities all continue to trended higher buoyed by revived optimism around President Trumps policies, coupled with strong US earnings reports.
 
The continued rally was largely triggered by President Trump's promise of an impending "phenomenal" announcement on taxes.
 
In general, concerns about the President's policies are easing slightly as it becomes evident he won’t be able to simply ride roughshod over the US judicial system. He is also showing some sense like telling the Chinese President that he’ll respect the "One China" policy.

Will the rally continue

By Wealth Know How in Commentary & Opinion

As we strap ourselves in and get ready for the rollercoaster ride that will be Donald Trump’s stint in office, we thought it was a good time to contemplate how events could play out in the years ahead. Studies has been done into the effects of populist governments – like Trump’s – and how their policies impact economic performance and the markets.
 
Initially, there is a sugar hit for markets and the economy – and indeed we are seeing this now with Trump. But after five or so years, populist policies lead to inefficiencies and wastes in the economy. The promises that brought the government to power are left unfulfilled and the people who supported them are left wanting. 

Crystal ball gazing – what’s in store for 2017?

By Wealth Know How in Commentary & Opinion

This is our last video for 2016.  So it seems only fitting that we look ahead and consider what might be in store for 2017. Without a crystal ball, here are my thoughts.
 
Overall, the divergence story will dominate 2017. This takes the shape of an environment where the US pursues re-inflation supply-side policies, whilst Europe and Japan take a different path – continuing to run loose monetary policy - controlled by central banks.
 
This difference will drive bonds and equities. It will also see the US Dollar continue to strengthen.
 

Oz wrap up

By Wealth Know How in Commentary & Opinion

We’ve spent the past few months focused on the US, but with the end of the year fast approaching it seems like a good time for an update on Australia.
 
This week we will see the release of Australian GDP numbers, which we expect will have stagnated in the third quarter. However, a soft GDP report will go some way to reducing speculation that the RBA will raise rates next year.
 
We also expect to learn this week that the sharp narrowing in Australia's trade deficit will continue. While Australia's current account should narrow sharply early next year as the rise in commodity prices boosts the value of exports.  This will be good for the government deficit and good for the country.

Well, who’d have thought…?

By Wealth Know How in Commentary & Opinion

People around the world have been taken by surprise twice in the past two weeks. First, by Trump’s convincing win in the US presidential race. And second, by the market’s surprisingly resilient response. But as we cautioned in our last post, the election was always going to be a close call and perhaps we should have been more prepared for a Trump victory.
 
Indeed, US equities have rallied sharply with investors apparently welcoming the end of election uncertainty. Sectors such as construction and banks have done particularly well as investors expect the new president to deliver a surge in infrastructure spending and a lighter regulatory touch.
 
The possible economic leg-up that the market believes Trump’s policies will deliver has also put a spark under the US Dollar. In turn, investors have fled government bonds on expectations the US Federal Reserve may need to raise interest rates faster than expected to contain inflation. 

US election – how will the market respond?

By Wealth Know How in Commentary & Opinion

Markets are awash with anxiety as we enter the final countdown to the US Presidential election. Asian markets will be the first to react, although they may close before a result is known depending on how tight the election is.
 
So how will the markets respond to the election?
 
If Trump wins, the market is expecting a 5% to 10% sell off as a knee jerk reaction, but hopefully a Brexit style recovery afterwards. 

Fatigued markets sit and wait

By Wealth Know How in Commentary & Opinion

Equity markets are looking fatigued, lumbering along with little volatility as they wait for the US election result.
 
The Australian market has done very little in recent years. The ASX200 is pretty much the same level it was three years ago. Whilst we haven’t been rewarded through capital appreciation, we have at least had dividends that are generally higher than the rest of the world. 

Brexit resurfaces as Sterling has flash crash

By Wealth Know How in Commentary & Opinion

Markets were travelling along pretty smoothly until Friday morning when the British Pound had a "flash crash". In a matter of seconds, the Sterling fell more than 6% before recovering about 4%. The shock drop quickly refocused the market’s attention from the bank issues in Europe to Brexit.

The falling Sterling has helped cushion the UK economy against the adverse effects of Brexit. Indeed, in the short term we may even see UK GDP growth pick up as export services like banking and tourism prosper under a lower Pound. 

Equities rebound as Fed holds fire

By Wealth Know How in Commentary & Opinion

 
Last week was strong for global equities, with the US Federal Reserve retaining its cautious stance on raising interest rates and the Bank of Japan unveiling tweaks to its own monetary policy.
 
Gains on Wall Street followed the latest meeting of the US Federal Reserve, at which the central bank decided yet again to leave borrowing costs unchanged.
 
Expectations for rate increases next year were also scaled back, with the US Federal Reserve deciding to remove one planned rate hike from next year. The US dollar weakened in response, although no one is expecting a more material decline in the currency in the near term.
 
Another currency riding a wave of volatility was the Japanese Yen after the Bank of Japan announced a new strategy to steepen the yield curve via designated purchases of Japanese government bonds. 

True to form, September volatility returns

By Wealth Know How in Commentary & Opinion

September - start of the southern hemisphere spring. A calendar full of footy finals. And a time of seasonally high volatility in equity markets.
 
We’ve had two months of very calm markets following the volatility brought about by Brexit, but it seems to be on the rise again. This time fuelled by the European Central Bank's decision to stand pat on monetary policy as well as uncertainty over whether the US Federal Reserve will increase interest rates.

Search for yield pays dividends for Aussie equities and currency

By Wealth Know How in Commentary & Opinion

As we enter the 3rd week of August, the Northern Hemisphere is on holiday; and it is no surprise that the markets are confounding investor expectations, as they are meant to do in August.
 
In the current interest rate environment, it is all about yield. The amount of debt with negative yield to maturity is now a staggering 13tn dollars.  It is no wonder that the main driving force for equities will be the global hunt for yield. This in turn is seeing increased inflows into the local Aussie market.

Disappointment all round – Japan, the US and oil prices fail to excite

By Wealth Know How in Commentary & Opinion

It will be an interesting week ahead for markets after the Bank of Japan's latest efforts to stimulate the economy failed to excite market participants; the US reported weak second-quarter GDP data; and oil prices took a fresh slide.
 
Starting with Japan, where the Bank of Japan decided last week not to cut the interest rate or to increase quantitative easing. 

Japan pushes markets higher

By Wealth Know How in Commentary & Opinion

Markets have continued to rise during the past two weeks, driven by the landslide victory for Japan's ruling coalition in the Upper House election.
Gains made in Europe, Australia and the US paled in comparison to the 9.2% jump in the Nikkei 225.
It now seems likely Japan will roll out aggressive fiscal stimulus along with more quantitative easing to bolster growth and inflation. We doubt the Bank of Japan will directly finance a game-changing fiscal boost via "helicopter money" as some in the market are speculating.

Markets shrug off Brexit

By Wealth Know How in Commentary & Opinion

Much to the surprise of market participants, equities have recovered most of the losses they experienced in the wake of the Brexit vote. It seems the market came to the very quick realisation that the UK’s exit from the EU will take a long time and so things will remain the same from an economic point of view for now.
Multinationals listed on European and UK exchanges look more valuable in local currency terms.  Sterling and the Euro have weakened and the equity markets have rallied to offset the large currency falls. 

Brexit dominates discussion

By Wealth Know How in Commentary & Opinion

Markets will be dominated by the Brexit until the UK votes on Thursday. If the vote is in favour of leaving the EU, we expect the initial impact on markets to almost certainly be negative. However, there are several factors that might limit the downside:
Current nervousness should ease once the outcome is known, and recent volatility has been caused by this nervousness;

Rate rise rollercoaster loops the loop

By Wealth Know How in Commentary & Opinion

Two weeks ago the market was awash with talk of a June interest rate rise in the United States. But poor data has sent the rate rollercoaster around the tracks again with expectations of a rise pushed out to later in the year.
 
The main driver was a poor US employment report, which was then reinforced by an unexpected dip in US service sector activity.  The market is concentrating on the most recent data and discounting the better than expected US data out during last week.
 
Non-farm payrolls rose by a much smaller than expected 38,000 last month. The jobless rate, however dropped to 4.7% driven by a big fall in the labour force.

Rates rollercoaster

By Wealth Know How in Commentary & Opinion

Ugh, here we go again. The rate hike rollercoaster kicked off again this week when the US Federal Reserve (Fed) said it still wants to raise interest rates – and could do so as early as June.
Prior to last week’s announcement, investors had virtually dismissed the potential of a June rate rise. Indeed, some people inside the Fed were concerned that the market wasn’t taking the potential seriously enough. But investors are now assigning odds of roughly one-in-three that tightening will resume in June.
In Australia 24 out of 25 economist believe that there will be a rate cut by August.
We continue to believe the Fed will raise rates by 25bps on two occasions this year, provided economic recovery and financial conditions remain stable. And we believe the case for acting in June remains strong.

Commodities madness reaches fever pitch

By Wealth Know How in Commentary & Opinion

Chinese investors are sending shock waves through global commodity markets as they pile into futures. Retail investors, high net worth individuals and wealth managers have caused a surge in commodities trading over the past couple of months.
 
The madness has surprised western investors and rattled global commodity markets, causing a sharp run-up in the price of steel and iron ore futures.
 
In an attempt to cool the market and reduce the high volumes, the regulator increased transactions fees and margin requirements on Chinese commodity futures. This led to the large fall in iron ore prices we have experienced.

Currencies take centre stage

By Wealth Know How in Commentary & Opinion

On Thursday of this week, the US equities market will record its second-longest bull run of all time. At 86 months (and counting), the current bull era that started in March 2009 is set to surpass the postwar rally of 1949 to 1956. The only rally it will trail is the decade-long boom of the 1990s that finished with the dotcom bubble burst in March 2000.
Indeed, we’ve seen bullish sentiment across many asset classes recently, particularly emerging markets and commodities, driven by the US Federal Reserve lowering expectations of interest rate tightening this year.

Markets down in the dumps

By Wealth Know How in Commentary & Opinion

Equity markets appear to be stuck in a rut as investors find it hard to shake off prevailing negativity. Markets are fixed on a view that oil and commodity prices will never rebound and that the bank’s business model is broken due to over regulation and weaker economic growth.
We think too much risk has been priced in, and there is the potential for upside surprise. A few factors point to this. There are signs of a rebound in oil prices. Improving economic signals are coming out of China and fears of a Chinese devaluation are reducing; and also a weaker US dollar.

Markets calm, momentarily

By Wealth Know How in Commentary & Opinion

During the last two weeks, we’ve witnessed a dramatic fall in equity market volatility compared to that which we experienced during the first two months of 2016. However, I don’t expect the lower levels of volatility to continue.
The drop in volatility has been driven by a number of factors including expectations the US Federal Reserve will be slower to cut rates than was originally thought in December 2015. Also coming into play is easing announcements from the European Central Bank, the weaker US Dollar and stabilisation of the Renminbi.

ECB unsettles markets

By Wealth Know How in Commentary & Opinion

The European Central Bank sent waves through markets last week when it delivered a package of measures that exceeded expectations. Most notably the bigger-than-expected boost to monthly bond purchases. Calmer conditions did, however, return to markets and global stocks continued to rally.
Unfortunately, the ECB President reinforced the view that the ECB is running out of ammunition. He suggested that interest rates have reached a bottom. It has become abundantly clear in recent years that monetary policy alone cannot address all of Europe’s problems.

Market Wrap 7 March 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 7 March 2016

Oil supports markets whilst US consumers spend up

By Wealth Know How in Commentary & Opinion

The strong rally in oil prices last week helped plump up markets.  But perhaps the more significant news for markets was that data out of the US showed that personal inflation had picked up.
This is the strongest increase since the end of 2012. It indicates that strong employment numbers and increasing average hourly wages are beginning to flow through to the real economy, causing "slack" in the US economy to decrease.

Market Wrap 29 February 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 29 February 2016

Market turmoil – choose your own adventure

By Wealth Know How in Commentary & Opinion

Markets are in turmoil. But why?
The answer depends on which adventure you want to follow. There is a raft of options being thrown around as we try to get our heads around what is causing the selloff. Some of the explanations include:

• OPEC’s inability to cut oil output;
• Sovereign wealth funds selling equities;
• The selloff in Chinese equities;
• Fears of a global recession;

January closes with a bounce

By Wealth Know How in Commentary & Opinion

January was a pretty shocking month for global equities. But it managed to finish with a promising bounce as bulls took heart from the Bank of Japan’s (BoJ) surprise policy easing, along with optimism about the pace of US interest rate rises.

The more positive tone also coincided with a strong rally in oil prices. Brent rose 8% to a three-week high. 

Market Wrap 1 February 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 1 February 2016

Markets spooked as oil leads commodity crash

By Wealth Know How in Commentary & Opinion

What a start to 2016! With a change in calendar year, came a change in investor sentiment - sparking a large sell off in the markets.
There is no sign of a recession on the horizon for the US, Australia, China or globally.  There is no collapse in the banking and payment system like there was in 2008.
Which leaves us with a fall driven by a changing sentiment. Investors appear to think that stocks were overvalued and needed to come down. The oil price along with news out of China were the catalysts for the sell.
To panic or not to panic? That is the question. 

A review of 2015

By Wealth Know How in Commentary & Opinion

The year is almost over. Its biggest event as far as markets are concerned — the first rise in US interest rates in almost a decade — is still ahead, but now seems a certainty.
At the outset of 2015, there was a consensus that the Federal Reserve would start to raise rates, and that the European Central Bank, far more reluctant to ease monetary policy, would be obliged to resort to quantitative easing to support its economy.
The Federal Reserve, following the broadly positive US employment report for November, is almost certain to raise rates this month. The ECB last week has cut rates and extended quantitative easing again.

Market Wrap 30 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 30 November 2015

Christmas cheer returns to markets

By Wealth Know How in Commentary & Opinion

Despite the horrific attacks that took place in Paris last Friday and subsequent terrorism-related events, the traditional Christmas rally in equities looks to have begun with a reversal of the sell-off from two weeks ago.
Equity investors appear relaxed and also increasingly comfortable with the prospect of a US rate rise, which is looking more and more likely to be announced by the US Federal Reserve at its mid-December meeting. 

Market Wrap 23 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 23 November 2015

Market Wrap 16 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 16 November 2015

Odds of a US rate rise rocket

By Wealth Know How in Commentary & Opinion

The US Federal Reserve will step back on to centre stage this month with everyone wanting to know whether they'll hike rates in December. The market had only given a 35 per cent chance to a December rise, but this flipped dramatically to 70 per cent when the latest US employment report was released.
The game changing report was strong in all aspects - the unemployment rate, the number of new jobs and a fall in the under-employment rate to less than 10 per cent – but most importantly, there was a strong increase in wage growth - the strongest annual wage growth since mid-2009.
Of course, there is still one more employment number due out before the December meeting so it's not a given that rates will be hiked.

Market Wrap 3 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 3 November 2015

The six Cs that turned the market

By Wealth Know How in Commentary & Opinion

If you were wondering what has caused markets to turn, you need to take a look at the six Cs – China - consumer demand – commodities – currencies - central banks and company earnings.
Let’s take a look at each one.
Recent data out of China indicates that growth is stabilising and fears of a hard landing were overstated.  Also recent flash PMI numbers for advanced economies showed activity is picking up. Claims that the global economy is in the throes of a broad-based downturn have been exaggerated.

Market Wrap 26 October 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 26 October 2015

Commodities turn and equities rally

By Wealth Know How in Commentary & Opinion

The two big stories dominating the news last week were the upturn in global stock markets; and the rally in commodities prices.
Oversupply issues have plagued commodity markets of late but a bunch of recent events suggest the tide may be turning.
The rally in prices that we saw last week came off the back of geo-political events in Syria.  Whilst we caution that the path ahead for commodities may not be smooth; we do believe the turn is near, if not already underway. 

Market Wrap 6 October 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 6 October 2015

Fed holds rates, upsets markets

By Wealth Know How in Commentary & Opinion

Chair of the US Federal Reserve, Janet Yellen, has sought to calm markets by saying a US rate rise is likely to happen this year. Her comments come after the Fed kept rates steady at its September meeting, which added to the volatility we are currently experiencing in the market.
Many may have thought steady rates would be good news for global markets, but not so. The Fed's failure to raise rates reinforces investor concerns about the health of the world economy, particularly China.
If the Fed really wanted to alleviate concerns, it should have hiked rates at their meeting. 

Market Wrap 28 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 28 September 2015

Markets await Fed response

By Wealth Know How in Commentary & Opinion

This week is going to be all about the US and the Federal Reserve's decision on whether it will raise interest rates. The market has only put a 30% chance on a rise but personally I think it’s too close to call.

With the Fed currently in a blackout period and no other major economic news due out this week, the market is patiently waiting. The uncertainty around their decision has caused volatility in the market – possibly more than we would see if they did actually announce a hike.
Of course, even if the Fed doesn’t raise interest rates this week, it is likely to begin tightening monetary policy very soon.
 

Market Wrap 14 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 14 September 2015

Market Wrap 9 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 September 2015

China fears spark market movements

By Wealth Know How in Commentary & Opinion

Fears over a slowdown in Chinese growth sparked an aggressive sell-off and global markets fell sharply at the beginning of last week. However, a surprisingly strong rally towards the end of the week saw markets recover some of their losses.
Uncertainty around the next Fed interest rate move compounded confusion in the market, and will continue to be a driving force in market movements in the coming weeks.

Market Wrap 31 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 31 August 2015

Market Wrap 24 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 24 August 2015

Shock waves from the rumbling Renminbi

By Wealth Know How in Commentary & Opinion

China sent shock waves through global commodities, interest rates and stock markets last week when it undertook the biggest devaluation of its currency in almost two decades.
However, the devaluation was actually not that big – with the People’s Bank of China devaluing by only 1.9 per cent.
So why did the market react so strongly?

Market Wrap 18 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 18 August 2015

Market Wrap 12 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 14 August 2015

Market Wrap 3 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 3 August 2015

Market Wrap 27 July 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 27 July 2015

China fails to excite Gold prices

By Wealth Know How in Commentary & Opinion

Last time I appeared Greece was centre stage with its referendum just hours away. Fast forward two weeks and the drama has eased a little with a new bailout proposal on the table. However this won’t be the solution Greece needs - and there will be further political fallout.
Now the news of Greece is ‘so last week’ with major stock markets around the world posting strong gains as concerns not only eased about Greece but also about China.  Well-received US earnings reports also aided markets.

Market Wrap 20 July 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 20 July 2015

Australian Dollar being driven lower by China

By Wealth Know How in Commentary & Opinion

The eyes of the world are focused on Greece.  This week its’ people went to the polls to decide their financial future. It’s a tragic turn of events that has the potential to undermine confidence in Europe.  But in my opinion China is a much bigger story.  Indeed - much of the recent selloff in Australia is being driven by the correction in the mainland Chinese share market.
But first to Greece where the Greek referendum will have little immediate impact on the country’s situation. People still have access to limited cash.  Bank’s cash reserves look like they’ll run out very soon.
Political leaders now go straight back to the negotiation table – this assumes the creditors will meet with Greece.

Market Wrap 6 July 2015

By OptionsXpress in Commentary & Opinion

Market & Economic Wrap

Market Wrap 29 June 2015

By OptionsXpress in Commentary & Opinion

OptionsXpress Market Wrap 29 June 2015

Greece fails to spook investors

By Wealth Know How in Commentary & Opinion

For almost six years now, we’ve been following the Greece story. Waiting patiently for some sort of resolution and an answer to the question – will Greece default or exit the Euro? And with a negative outcome seemingly possible and not far away, we would expect the market to be getting nervous about the potential flow on effects for investments and the global economy.
Yet, instead of flocking to safety, investors have started shifting from the traditional safe haven of bonds to the more risky domain of equities. Last week we saw the 4^th largest rotation out of bonds into equities in 6 years.

Market Wrap 15 June 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 15 June 2015

Australian banks out of favour – globally!

By Wealth Know How in Commentary & Opinion

Australia’s stronger GDP number released last week has reduced expectations that interest rates will be cut again by the RBA.
This did not help the yield-sensitive banking sector, which was subsequently sold off. In fact, banks have been a major cause of the 3% decline in the Australian market during the past two weeks. 
Much of the problem is coming from overseas investors exiting Australian banks in favour of European and US bank.
The US banking sector is becoming more attractive as US long bond yields rise. Rising yields support overseas bank margins making them more attractive than Australian banks.

Market Wrap 1 June 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 1 June 2015

Signs of global growth picking up

By Wealth Know How in Commentary & Opinion

Equity markets around the world have been subdued the past couple of weeks - with the exception of Australia - which was sold off partly due to the closure of stockbroker BBY.
The recent uplift in consumer confidence in Australia, brought about by the Federal Budget, wasn’t enough to stem the drop in equities.
Likewise, a Budget-related increase in business confidence is unlikely to translate into faster investment. The budget has generated some good headlines for the Treasurer, but at the end of the day the economy and job growth had already begun accelerating before the budget.

Market Wrap 25 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 25 May 2015

Market Wrap 18 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 18 May 2015

Market Wrap 11 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 11 May 2015

Long bonds dominate as the oil price recovers

By Wealth Know How in Commentary & Opinion

Last week was all about long bond yields. And it’s not surprising given German Bunds have gone from 7bps to 70bps in just a few short weeks. In fact long bond yields all around the globe have increased quite significantly since mid-January.
What’s driving them? 

Market Wrap 4 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 4 May 2015

15 years later and the NASDAQ finally hits new highs

By Wealth Know How in Commentary & Opinion

It’s only taken 15 years but the Nasdaq Index has finally recovered from the dramatic dotcom bust.  Bell-weather technology stocks like Google and Amazon have helped push the technology weighted index along thanks to high-than-expected earnings.  This is not like the dotcom days when the companies had no earnings.
More broadly in the US, the market is now anticipating a rate hike in September. Eyes will be on the following data this week to confirm or change this view:

Market Wrap 27 April 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 27 April 2015

Market Wrap 20 April 2015

By Wealth Know How in Commentary & Opinion

Market Wrap 20 April 2015

US rate rise – will they or won’t they?

By Wealth Know How in Commentary & Opinion

Expectations of an interest rate rise in the US continue to dominate markets.  The latest minutes from the US Federal Reserve indicated a divide over whether to take the plunge in June or September.
This means every bit of data coming out of the States will be closely scrutinised as people try to guess when the Fed will be prompted to act.  Markets also have dismissed the recently disappointing US employment report as a one off and not a trend. 

Market Wrap 8 April 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 8 April 2014

Muddled markets, mixed messages

By Wealth Know How in Commentary & Opinion

Three things happened in the US last week that caught my attention.
Number one, there was weaker-than-expected demand for long-dated US bond. Two, US equities were sold off. And three, Chair of the US Federal Reserve Janet Yellen said cash is not a good place to store wealth.
With all three asset classes apparently out of favour, where does this leave investors? 

Market Wrap 30 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 30 March 2015

Market Wrap 23 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 23 March 2015

US Dollar leads markets

By Wealth Know How in Commentary & Opinion

It’s all about the US Dollar this week as the currency continues to strengthen, dominating equities, rates and commodities.
It’s the main reason behind the rally in European equity markets – up over 10% since the beginning of the year.  And it’s also contributing to the Nikkei 225 rally, which is now above 19,000 for the first time in 15 years.

Market Wrap 17 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 17 February 2015

Market Wrap 9 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 March 2015

Fabulous February – Equities accelerate globally

By Wealth Know How in Commentary & Opinion

February proved to be a great month for equities.  Many records were broken and markets are posting their best monthly performance in years. Here's a roundup of some of the major markets around the world:

All eyes on Greece debt drama

By Wealth Know How in Commentary & Opinion

Equity markets continue to perform well; helped along by the bounce back in oil prices; and more certainty around the first US rate rise. However; the eyes of the world are on Greece this week as the country stares down its creditors.
Finance ministers from the euro-zone are trying to reach a deal on Greece that would enable the country to meet its near-term financial obligations.

Market Wrap 16 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 16 February 2015

Market Wrap 9 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 February 2015

Market Wrap 2 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 2 February 2015

Market Wrap 19 January 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 19 January 2015

Looking ahead at 2015 risks

By Wealth Know How in Commentary & Opinion

There’s always lots of chatter about market opportunities, whether it’s broad macro trends, asset classes or individual stocks. It seems everyone has an opinion about how and where to invest.
 
What you hear far less talk about are market risks, but we all know they can have enormous impact on an investment portfolio.

The importance of financial literacy

By Wealth Know How in Commentary & Opinion

That old saying, “a fool and his money are soon parted”, has never been more apt. But today, even the wise must be wary.
The world of finance is changing rapidly. Although there are more investment options for consumers, more sophisticated products, and no shortage of advice or advisers, the risks and responsibilities for each individual are far greater.

Gazing into the crystal ball – a look at what’s in store for 2015

By Wealth Know How in Commentary & Opinion

Gazing into the crystal ball to look at what’s in store for 2015 is always dangerous, but we thought we would give it a go anyway.  The key theme for 2015 will be the contrasting situations in the US and Europe. We expect the US to see continued economic growth and rising interest rates, whilst Europe will remain largely stagnant and pursuing a program of full-scale quantitative easing.  This will affect currencies, interest rates, stock and commodities.

Market Wrap 15 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 15 December 2014

US markets takes out Gold and Silver - leaves Europe in its wake

By Wealth Know How in Commentary & Opinion

Market & Economic Insights

The results are in – some of the best performing developed market assets for 2014 were US Equities and the US Dollar.  As a result in USD terms the US market has outperformed Europe by the widest margin in 40 years. This widening gap between the US and Europe economies will be a major theme for 2015.

Market Wrap 1 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 1 December 2014

Japan weighs on Australian market

By Wealth Know How in Commentary & Opinion

The Australian market has not performed well during the last few weeks as Japan embarks on a program of massive quantitative easing.
This is contrary to the performance of other markets such as the S&P500 which has made new highs. The Nikkei 225 in Japan which has closed up four out of the last five weeks.  Even Europe and other Asian markets have rallied off their lows.
 

Market Wrap 24 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 24 November 2014

Market Wrap 17 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 17 November 2014

US rate rise plausible as jobs data satisfies

By Wealth Know How in Commentary & Opinion

The bond market welcomed the US jobs data released last week which showed a gain of 214,000 non-farm payrolls for October. A surge of 638,000 in the alternative household survey measure of employment also helped push the unemployment rate down to 5.8% in October for the US. 

Market Wrap 10 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 10 November 2014

Market Wrap 3 November 2014

By OptionsXpress in Commentary & Opinion

OptionsXpress Market Wrap 3 November 2014

All eyes on equities but US T-Bonds is where it’s at

By Wealth Know How in Commentary & Opinion

Some big moves in the Dow Jones, the S&P500 and, to a lesser extent, the ASX200 have caused discussion amongst investors and prompted suggestions that we are in a high volatility environment.

Market Wrap 27 October 2014

By Wealth Know How in Commentary & Opinion

Market Wrap 27 October 2014

Market Wrap 20 October 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 20 October 2014

Bears grumble as markets decline

By Wealth Know How in Commentary & Opinion

The bears have picked up the scent of the recent decline in equities and are starting to grumble about the potential for a new bear market. Since September, we’ve seen drops of 5%+ for the S&P500; 9%+ for the ASX200; and 9%+ for the Nikkei 225; but we think the bears are getting over excited and September’s drop is unlikely to mark the beginning of a new bear trend.
 

Market Wrap 13 October 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 13 October 2014

4 reasons why the market fell

By Wealth Know How in Commentary & Opinion

Like Australia, many global equity markets have taken a turn downwards, with the falls in the markets closely linked to the rise of the US Dollar.  However, the S&P500 and Nikkei 225 have bucked this trend to hold up pretty well during September.  

Currency markets heat up

By Wealth Know How in Commentary & Opinion

 Two events are set to grab the markets attention this week; the outcome of the US Federal Reserve's policy meeting; and the referendum on Scottish independence. Both are important for currency markets, which is where most of the action has been taking place recently. 

September setback?

By Wealth Know How in Commentary & Opinion

As the northern hemisphere enjoyed its summer holidays, markets hotted up with global equities rallying in August.  But as the north returns to work – including the central banks – we wonder if volatility will return during September. 

Equity markets’ zombie dance

By Wealth Know How in Commentary & Opinion

Just when you thought equity markets were looking shaky, they’ve taken us by surprise and popped back to life like some sort of zombie back from the dead.
Around the world, the US, Asian and Australian markets performed well last week making up for most of the losses of the past month. European markets even came back a bit although it was more a stabilisation than a recovery as the issues in Ukraine continued to weigh heavily on the region. 

Why the market pullback?

By Wealth Know How in Commentary & Opinion

Markets took a hit last week as a bunch of factors, including US inflation concerns and a technical default in Argentina, spooked investors.  In our view, there are two main drivers for the pullback....

Market holds its nerve over Ukraine

By Wealth Know How in Commentary & Opinion

As the tragic news of Malaysian Flight MH17 sent shockwaves around the world last week, investors initially responded by jumping out of equities and into safe haven assets.  However, markets calmed down in the days that followed, and are now in wait and see mode on how the West will responds to Russia.

Australians refuse to part with cash

By Wealth Know How in Commentary & Opinion

Employment in Australia is holding steady and wages are rising.  Australians, however, are choosing to hang on to their hard-earned cash. Consumer spending has slowed during the past few months owing to warmer weather and the negative response to the Federal budget. 

What volatility? Markets shrug off global issues

By Wealth Know How in Commentary & Opinion

Despite the latest crisis in Iraq and the renewed escalation of tensions in Ukraine, markets remain relaxed with little volatility. Other potential flashpoints; including the unresolved crisis in Thailand, new terrorist outrages in Nigeria and Kenya; and economic and political instability in Argentina, Brazil and Turkey, have also failed to increase volatility. 

Are investors turning a blind eye to positive indicators?

By Wealth Know How in Commentary & Opinion

Despite a wave of positive numbers – GDP, employment, interest rates, equity markets – investors seem reluctant to pull themselves out of their current state of pessimism. We’re not sure why. 

Market and Economic Commentary – 28 May 2014

By Wealth Know How in Commentary & Opinion

Favourable news out of China last week helped stop the selloff in global markets and push the S&P500 to close above 1900 for the first time in its history. Even the NASDAQ, which was sold off by around 10% at the beginning of the year, has rallied significantly during the past week.

Market and Economic Commentary – 15 May 2014

By Wealth Know How in Commentary & Opinion

Markets are waiting, but it’s not clear what they are waiting for. It may be a combination of factors.  Europe remains constrained by ECB inaction and the threat of the Ukraine.  The US is nervy about low bond yields and the DOW and S&P making new highs.  In Australia we are digesting the new federal budget.

Market and Economic Commentary – 30 April 2014

By Wealth Know How in Commentary & Opinion

Global markets have been treading water during the past couple of weeks.  They are hindered by the Ukraine crisis, the US reporting season, and poor Chinese PMI numbers.  On the plus side speculation that the European Central Bank might loosen monetary conditions has supported the markets.

Market and Economic Commentary - 16 Apr 2014

By Wealth Know How in Commentary & Opinion

The Australian market made six-year highs last week spurred on by strong demand for Australian bonds, equities and the Aussie Dollar. The rally was short-lived and markets were quickly sold off in response to declines in the US and Japan equities. Also some bad news out of China in relation to imports and exports didn’t help.

Market and Economic Commentary - 2 Apr 2014

By Wealth Know How in Commentary & Opinion

First to the Australian Dollar, this reached a new four-month high last week. Many commentators put the rise down to the possibility of China stimulus but we think there is a lot more to the story. In our view, a number of interrelated factors are contributing to the rise.

Market and Economic Commentary - 19 Mar 2014

By Wealth Know How in Commentary & Opinion

The market continues to face a double threat as the crisis in Ukraine persists and fresh fears of a hard landing in China take centre stage. Despite these concerns, the market surprised us over the last 2 week by holding its nerve and not falling nearly as far as expected.

Market and Economic Commentary – 5 Mar 2014

By Wealth Know How in Commentary & Opinion

The issues in Ukraine are very complicated with regions such as the Crimea considering itself more Russian than Ukraine. For the Russian President Vladimir Putin keeping Ukraine within Russia’s sphere of influence is critical and the current game plan seems similar to what the Russia strategy was for Georgia in 2008.

Market and Economic Commentary – 19 Feb 2014

By Wealth Know How in Commentary & Opinion

Recently bad weather and holidays are playing havoc with global economic numbers, but the market seems indifferent with the rally continuing after a sell-off early in the year. Even emerging markets, which took a huge hit recently, are up 7% since the market turned in February.

Markets climb as investors watch US healthcare bill

By Wealth Know How in Commentary & Opinion

US and global stocks are trading at record highs as markets continue to climb a wall of worry.   This is still an unloved rally.
 
Markets now will be keeping a close eye on the US Senate to see whether it passes the new US healthcare bill.
 
Getting this bill through the senate is a test case for the Trump administration. If the Republicans are successful in winding back Obamacare, they will have a greater chance of getting their next major initiative – tax reform – passed.
 
As for rates in the US, expectations for when the next  rate rise will occur have changed significantly following comments by US Federal Reserve Chair, Janet Yellen, along with weaker-than-expected inflation figures.   The market now only has a 40% chance of a rate hike in September.
 
That said, the Fed cannot ignore the strength of the US labour market which is stronger than when they first lifted rates in 2015.
 
A continuing series of strong employment reports in the US could quickly change the markets expectation for a rate hike. This occurred in 1994 to1995 when the Fed began raising rates in a mild inflationary environment due to strong labour market conditions.
 
The change in expectations for US rates has helped the Australian Dollar which has risen to above $0.79 unexpectedly.  It has also received help from a surge in the Canadian dollar and renewed optimism in global growth – especially from China.
 
China’s, second quarter GDP didn’t disappoint – growth is still stronger than market expectations.
 
Also, we should look at China's export growth which has accelerated recently. These figures help to confirm the global growth story.
 
A final word on oil.
 
Prices are being helped by expectations that growing demand could help reduce a global oil glut by the second half of the year. The wild card for the price of oil is shale oil production in the US.
 

Robo advice – that Mack truck is still coming!

By Wealth Know How in Commentary & Opinion

When the term “robo advice” first entered the financial planning industry’s lexicon, it sent shock waves through its ranks. Could automation spell the death of the financial planner? Could this low-cost, efficient, alternative to the traditional approach to financial planning be the wave of the future?
 
Well, after the industry “took a Bex and had a good lie down”, it was generally decided the financial planning industry did have a future.
 
Sure, automated financial advice would cause disruption; but the need for specialist advice around issues such as estate planning, investment strategy, and self-managed super fund compliance to name but a few, would ensure the industry’s survival and growth.

Trump ups political risk

By Wealth Know How in Commentary & Opinion

Offshore equity markets have recovered quickly since last Wednesday’s sell-off which was prompted by growing fears that US President Trump would be impeached. Markets aren’t concerned with the impeachment itself, but rather what would happen to the re-inflation policy if Trump wasn’t President anymore.
 
Over the weekend, more news stories have come out on Trump’s actions. The speed of the stories means that we are likely to hear more over the coming weeks.

Markets calm, momentarily

By Wealth Know How in Commentary & Opinion

During the last two weeks, we’ve witnessed a dramatic fall in equity market volatility compared to that which we experienced during the first two months of 2016. However, I don’t expect the lower levels of volatility to continue.
The drop in volatility has been driven by a number of factors including expectations the US Federal Reserve will be slower to cut rates than was originally thought in December 2015. Also coming into play is easing announcements from the European Central Bank, the weaker US Dollar and stabilisation of the Renminbi.

Market Wrap 9 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 March 2015

Market Wrap 2 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 2 March 2015

Market Wrap 8 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 8 December 2014

Market Wrap 1 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 1 December 2014

Investing, not speculating

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Roger Montgomery revisits the fundamentals of value investing.

Valuation tips - Incremental ROE

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Tim Kelley shares with us some tips on valuating a business by looking at their incremental return on equity.

Talking Quality

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Andrew Macken discusses the three main sources of quality to consider when evaluating whether a business is investment-worthy.

Where to from here?

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Roger Montgomery reminds us of the importance of waiting for value to present itself. 

Value Investing and the Market

By Montgomery Investment Management in Commentary & Opinion

In this video insight, Roger Montgomery reminds us of the fundamentals of value investing, and the importance of investing in stellar companies, no matter the movements of the market.

Venezuela tension heats up

By Wealth Know How in Commentary & Opinion

Forget the war of words taking placing over North Korea, eyes are turning to the crisis unfolding in Venezuela. That includes the eyes of President Trump who it seems wouldn’t rule out military intervention. This comes despite the US skipping the recent Lima meeting between 12 countries from the American continents, which gave the market the impression the US would take a back seat when it came to sorting out this crisis.
 
Venezuela is a country rich in oil which exports mainly to the US. Any disruption to that supply will prompt the price of oil to rally globally and affect the share price of energy companies.
 

Aussie dollar surprises market

By Wealth Know How in Commentary & Opinion

The Australian dollar’s strong rally in recent weeks has caught the market by surprise.  It could even push higher – even maybe hitting US$0.85. That’s a big jump when it was just US$0.74 back at the start of June.
 
The strength of the currency reflects some main factors:
 
Like an increasing chance of a rate rise in Australia on the back of economic strength. Saying that, we don’t expect the Reserve Bank of Australia to hike rates soon. Also, global growth continues to be resilient which supports the China story. China has released some unexpectedly upbeat data, which has prompted an increase in the price of industrial metals.
 
Even with weaker-than-expected inflation numbers in Australia the dollar has still been strong.
 
How long the Australian Dollar will be strong for is still to be seen. The Chinese economy may lose some momentum in the second half of the year, which could affect our currency.
 
At the end of the day, it will be the strength of industrial commodities like Oil and Iron Ore which will drive the direction of the Australian dollar.
 
Speaking of oil, the price continues to rally driven by large falls in US crude and gasoline stock, as well as a pick-up in demand. The weakness of the US Dollar against major currencies is also aiding the oil price.
 
Current geo-political risks including issues in Venezuela, the proxy war in Yemen - between Iran & Saudi Arabia - and the problem of North Korea could also add fuel to the rally in the price of oil.
 
Equity markets, however, will remain on a cautious footing as technology stocks retreat and US wage growth softens.
 
The latest sell-off in tech stocks has made for dramatic headlines, comparable with the dot com collapse. However, unlike back then, the key difference is that the recent strength appears to be justified by improved earnings – both actual and projected.   This contrasts with the hype of the dot com era which was based on projected earnings alone
 
Finally, a word on emerging market equities which have continued to rise recently. Despite the gains, valuation levels still appear quite low compared to developed market equities. Further rises in valuations and earnings should help emerging market equities to keep on climbing.  Not necessarily at the pace they have done so far in 2017.

Markets climb as investors watch US healthcare bill

By Wealth Know How in Commentary & Opinion

US and global stocks are trading at record highs as markets continue to climb a wall of worry.   This is still an unloved rally.
 
Markets now will be keeping a close eye on the US Senate to see whether it passes the new US healthcare bill.
 
Getting this bill through the senate is a test case for the Trump administration. If the Republicans are successful in winding back Obamacare, they will have a greater chance of getting their next major initiative – tax reform – passed.
 
As for rates in the US, expectations for when the next  rate rise will occur have changed significantly following comments by US Federal Reserve Chair, Janet Yellen, along with weaker-than-expected inflation figures.   The market now only has a 40% chance of a rate hike in September.
 
That said, the Fed cannot ignore the strength of the US labour market which is stronger than when they first lifted rates in 2015.
 
A continuing series of strong employment reports in the US could quickly change the markets expectation for a rate hike. This occurred in 1994 to1995 when the Fed began raising rates in a mild inflationary environment due to strong labour market conditions.
 
The change in expectations for US rates has helped the Australian Dollar which has risen to above $0.79 unexpectedly.  It has also received help from a surge in the Canadian dollar and renewed optimism in global growth – especially from China.
 
China’s, second quarter GDP didn’t disappoint – growth is still stronger than market expectations.
 
Also, we should look at China's export growth which has accelerated recently. These figures help to confirm the global growth story.
 
A final word on oil.
 
Prices are being helped by expectations that growing demand could help reduce a global oil glut by the second half of the year. The wild card for the price of oil is shale oil production in the US.
 

Watershed moment for China

By Wealth Know How in Commentary & Opinion

The growing acceptance of China in international capital markets faces a watershed moment this week with a decision on whether a group of stocks listed on its $7 trillion domestic equity market will be included in the world's dominant emerging markets stock index – MSCI.
 
Inclusion in the index would confer recognition of China's domestic markets and oblige funds from all over the world to pour billions of dollars into the country's stocks.
 
Opinion is divided on whether MSCI will grant inclusion. In each of the past three years, the company has debated inclusion with index users only to reject it citing market access obstacles and governance issues. 

Market climbs wall of worry

By Wealth Know How in Commentary & Opinion

Popular opinion may be on a downer, but equity markets continue to rise. The US, Germany and the UK all reached record highs last week. Even Japan closed out above 20,000, which hasn’t been seen since Dec 2015.
 
It may be an unloved rally but we believe the market will continue to climb the wall of worry for the rest of the year.
 
In Australia sentiment amongst retail investors is low. There is a lot of negative news about the banks off the back of the bank levy, as well as concern for the resources sector in light of additional taxes on major miners such as BHP and RIO.
 
But when retail investors are negative, it’s usually a sign that the market is about to turn and begin to rally.

Aussie dollar to weaken

By Wealth Know How in Commentary & Opinion

The Aussie dollar is likely to remain under pressure for the time being as commodity prices continue to fall and Australia’s interest rate premium narrows.
 
The price of Australia’s main commodity exports iron ore and coal have a strong influence on the value of the Australian dollar. Recently, iron ore prices have fallen to about $65 a tonne – a big drop compared to the $90 a tonne they reached late last year and earlier this year.
 
Even when pricing hit $90, the Australian dollar didn’t get much above 75 cents. This doesn’t paint a strengthening outlook for the Australian Dollar in the current environment.  

French election bumps Euro higher

By Wealth Know How in Commentary & Opinion

After a nail-biting campaign, the first-round of voting in the French Presidential election took place over the weekend.  The centrist Emmanuel Macron and euro-sceptic Marine Le Pen winning the most votes.
 
The French people will now be choosing between two radically different visions for the country in the second round of voting on the 7^th of May.
 
If Macron wins, he will be the first independent President of the Republic in France. This would delight France’s EU partners and reassure investors. This is the most likely outcome, but anything is possible.
 
The world economy looks like it should expand at a healthy pace over the next two years if the latest forecasts from the International Monetary Fund are anything to go by.
 

Syrian missile strike shakes markets

By Wealth Know How in Commentary & Opinion

The decision by Trump to carry out the air strike raises questions about his wider foreign policy intentions. He has previously signalled a desire to pull out of conflicts in the middle east.
 
However, market fears subsided quickly, and turned their attention to the US economy.  At first glance the US employment report appeared disappointing falling far short of expectations.

Countdown to Brexit kicks off

By Wealth Know How in Commentary & Opinion

Get ready for a fun week ahead as the UK is set to trigger Article 50 which will bring Brexit another step closer to reality. Article 50 starts the countdown to the UK’s exit as they enter two years of negotiations with the EU.
 
We doubt the notification itself will trigger any sharp falls, but markets will no doubt be keeping a close eye on the negotiations over the coming months.

Odds strengthen that US will hike rates

By Wealth Know How in Commentary & Opinion

Rates look almost certain to rise in the US this week after the release of strong February employment data.
 
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
 
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.

Dow Jones on winning streak

By Wealth Know How in Commentary & Opinion

The market is awash with talk this week of the 12th consecutive rise of the Dow Jones Industrial Average. The last time the bellwether indices of US equities had a longer "winning streak" was in 1987.
 
But it’s not just the DJIA that’s powering ahead. Global equity markets are also posting record highs. Bulls have taken heart from promises made by US President Donald Trump regarding fiscal stimulus, infrastructure spending and deregulation.

Trump’s tax promises boost markets

By Wealth Know How in Commentary & Opinion

Equity markets, the US Dollar and commodities all continue to trended higher buoyed by revived optimism around President Trumps policies, coupled with strong US earnings reports.
 
The continued rally was largely triggered by President Trump's promise of an impending "phenomenal" announcement on taxes.
 
In general, concerns about the President's policies are easing slightly as it becomes evident he won’t be able to simply ride roughshod over the US judicial system. He is also showing some sense like telling the Chinese President that he’ll respect the "One China" policy.

Will the rally continue

By Wealth Know How in Commentary & Opinion

As we strap ourselves in and get ready for the rollercoaster ride that will be Donald Trump’s stint in office, we thought it was a good time to contemplate how events could play out in the years ahead. Studies has been done into the effects of populist governments – like Trump’s – and how their policies impact economic performance and the markets.
 
Initially, there is a sugar hit for markets and the economy – and indeed we are seeing this now with Trump. But after five or so years, populist policies lead to inefficiencies and wastes in the economy. The promises that brought the government to power are left unfulfilled and the people who supported them are left wanting. 

Crystal ball gazing – what’s in store for 2017?

By Wealth Know How in Commentary & Opinion

This is our last video for 2016.  So it seems only fitting that we look ahead and consider what might be in store for 2017. Without a crystal ball, here are my thoughts.
 
Overall, the divergence story will dominate 2017. This takes the shape of an environment where the US pursues re-inflation supply-side policies, whilst Europe and Japan take a different path – continuing to run loose monetary policy - controlled by central banks.
 
This difference will drive bonds and equities. It will also see the US Dollar continue to strengthen.
 

Oz wrap up

By Wealth Know How in Commentary & Opinion

We’ve spent the past few months focused on the US, but with the end of the year fast approaching it seems like a good time for an update on Australia.
 
This week we will see the release of Australian GDP numbers, which we expect will have stagnated in the third quarter. However, a soft GDP report will go some way to reducing speculation that the RBA will raise rates next year.
 
We also expect to learn this week that the sharp narrowing in Australia's trade deficit will continue. While Australia's current account should narrow sharply early next year as the rise in commodity prices boosts the value of exports.  This will be good for the government deficit and good for the country.

Well, who’d have thought…?

By Wealth Know How in Commentary & Opinion

People around the world have been taken by surprise twice in the past two weeks. First, by Trump’s convincing win in the US presidential race. And second, by the market’s surprisingly resilient response. But as we cautioned in our last post, the election was always going to be a close call and perhaps we should have been more prepared for a Trump victory.
 
Indeed, US equities have rallied sharply with investors apparently welcoming the end of election uncertainty. Sectors such as construction and banks have done particularly well as investors expect the new president to deliver a surge in infrastructure spending and a lighter regulatory touch.
 
The possible economic leg-up that the market believes Trump’s policies will deliver has also put a spark under the US Dollar. In turn, investors have fled government bonds on expectations the US Federal Reserve may need to raise interest rates faster than expected to contain inflation. 

US election – how will the market respond?

By Wealth Know How in Commentary & Opinion

Markets are awash with anxiety as we enter the final countdown to the US Presidential election. Asian markets will be the first to react, although they may close before a result is known depending on how tight the election is.
 
So how will the markets respond to the election?
 
If Trump wins, the market is expecting a 5% to 10% sell off as a knee jerk reaction, but hopefully a Brexit style recovery afterwards. 

Fatigued markets sit and wait

By Wealth Know How in Commentary & Opinion

Equity markets are looking fatigued, lumbering along with little volatility as they wait for the US election result.
 
The Australian market has done very little in recent years. The ASX200 is pretty much the same level it was three years ago. Whilst we haven’t been rewarded through capital appreciation, we have at least had dividends that are generally higher than the rest of the world. 

Brexit resurfaces as Sterling has flash crash

By Wealth Know How in Commentary & Opinion

Markets were travelling along pretty smoothly until Friday morning when the British Pound had a "flash crash". In a matter of seconds, the Sterling fell more than 6% before recovering about 4%. The shock drop quickly refocused the market’s attention from the bank issues in Europe to Brexit.

The falling Sterling has helped cushion the UK economy against the adverse effects of Brexit. Indeed, in the short term we may even see UK GDP growth pick up as export services like banking and tourism prosper under a lower Pound. 

Equities rebound as Fed holds fire

By Wealth Know How in Commentary & Opinion

 
Last week was strong for global equities, with the US Federal Reserve retaining its cautious stance on raising interest rates and the Bank of Japan unveiling tweaks to its own monetary policy.
 
Gains on Wall Street followed the latest meeting of the US Federal Reserve, at which the central bank decided yet again to leave borrowing costs unchanged.
 
Expectations for rate increases next year were also scaled back, with the US Federal Reserve deciding to remove one planned rate hike from next year. The US dollar weakened in response, although no one is expecting a more material decline in the currency in the near term.
 
Another currency riding a wave of volatility was the Japanese Yen after the Bank of Japan announced a new strategy to steepen the yield curve via designated purchases of Japanese government bonds. 

True to form, September volatility returns

By Wealth Know How in Commentary & Opinion

September - start of the southern hemisphere spring. A calendar full of footy finals. And a time of seasonally high volatility in equity markets.
 
We’ve had two months of very calm markets following the volatility brought about by Brexit, but it seems to be on the rise again. This time fuelled by the European Central Bank's decision to stand pat on monetary policy as well as uncertainty over whether the US Federal Reserve will increase interest rates.

Search for yield pays dividends for Aussie equities and currency

By Wealth Know How in Commentary & Opinion

As we enter the 3rd week of August, the Northern Hemisphere is on holiday; and it is no surprise that the markets are confounding investor expectations, as they are meant to do in August.
 
In the current interest rate environment, it is all about yield. The amount of debt with negative yield to maturity is now a staggering 13tn dollars.  It is no wonder that the main driving force for equities will be the global hunt for yield. This in turn is seeing increased inflows into the local Aussie market.

Disappointment all round – Japan, the US and oil prices fail to excite

By Wealth Know How in Commentary & Opinion

It will be an interesting week ahead for markets after the Bank of Japan's latest efforts to stimulate the economy failed to excite market participants; the US reported weak second-quarter GDP data; and oil prices took a fresh slide.
 
Starting with Japan, where the Bank of Japan decided last week not to cut the interest rate or to increase quantitative easing. 

Japan pushes markets higher

By Wealth Know How in Commentary & Opinion

Markets have continued to rise during the past two weeks, driven by the landslide victory for Japan's ruling coalition in the Upper House election.
Gains made in Europe, Australia and the US paled in comparison to the 9.2% jump in the Nikkei 225.
It now seems likely Japan will roll out aggressive fiscal stimulus along with more quantitative easing to bolster growth and inflation. We doubt the Bank of Japan will directly finance a game-changing fiscal boost via "helicopter money" as some in the market are speculating.

Markets shrug off Brexit

By Wealth Know How in Commentary & Opinion

Much to the surprise of market participants, equities have recovered most of the losses they experienced in the wake of the Brexit vote. It seems the market came to the very quick realisation that the UK’s exit from the EU will take a long time and so things will remain the same from an economic point of view for now.
Multinationals listed on European and UK exchanges look more valuable in local currency terms.  Sterling and the Euro have weakened and the equity markets have rallied to offset the large currency falls. 

Brexit dominates discussion

By Wealth Know How in Commentary & Opinion

Markets will be dominated by the Brexit until the UK votes on Thursday. If the vote is in favour of leaving the EU, we expect the initial impact on markets to almost certainly be negative. However, there are several factors that might limit the downside:
Current nervousness should ease once the outcome is known, and recent volatility has been caused by this nervousness;

Rate rise rollercoaster loops the loop

By Wealth Know How in Commentary & Opinion

Two weeks ago the market was awash with talk of a June interest rate rise in the United States. But poor data has sent the rate rollercoaster around the tracks again with expectations of a rise pushed out to later in the year.
 
The main driver was a poor US employment report, which was then reinforced by an unexpected dip in US service sector activity.  The market is concentrating on the most recent data and discounting the better than expected US data out during last week.
 
Non-farm payrolls rose by a much smaller than expected 38,000 last month. The jobless rate, however dropped to 4.7% driven by a big fall in the labour force.

Rates rollercoaster

By Wealth Know How in Commentary & Opinion

Ugh, here we go again. The rate hike rollercoaster kicked off again this week when the US Federal Reserve (Fed) said it still wants to raise interest rates – and could do so as early as June.
Prior to last week’s announcement, investors had virtually dismissed the potential of a June rate rise. Indeed, some people inside the Fed were concerned that the market wasn’t taking the potential seriously enough. But investors are now assigning odds of roughly one-in-three that tightening will resume in June.
In Australia 24 out of 25 economist believe that there will be a rate cut by August.
We continue to believe the Fed will raise rates by 25bps on two occasions this year, provided economic recovery and financial conditions remain stable. And we believe the case for acting in June remains strong.

Commodities madness reaches fever pitch

By Wealth Know How in Commentary & Opinion

Chinese investors are sending shock waves through global commodity markets as they pile into futures. Retail investors, high net worth individuals and wealth managers have caused a surge in commodities trading over the past couple of months.
 
The madness has surprised western investors and rattled global commodity markets, causing a sharp run-up in the price of steel and iron ore futures.
 
In an attempt to cool the market and reduce the high volumes, the regulator increased transactions fees and margin requirements on Chinese commodity futures. This led to the large fall in iron ore prices we have experienced.

Currencies take centre stage

By Wealth Know How in Commentary & Opinion

On Thursday of this week, the US equities market will record its second-longest bull run of all time. At 86 months (and counting), the current bull era that started in March 2009 is set to surpass the postwar rally of 1949 to 1956. The only rally it will trail is the decade-long boom of the 1990s that finished with the dotcom bubble burst in March 2000.
Indeed, we’ve seen bullish sentiment across many asset classes recently, particularly emerging markets and commodities, driven by the US Federal Reserve lowering expectations of interest rate tightening this year.

Markets down in the dumps

By Wealth Know How in Commentary & Opinion

Equity markets appear to be stuck in a rut as investors find it hard to shake off prevailing negativity. Markets are fixed on a view that oil and commodity prices will never rebound and that the bank’s business model is broken due to over regulation and weaker economic growth.
We think too much risk has been priced in, and there is the potential for upside surprise. A few factors point to this. There are signs of a rebound in oil prices. Improving economic signals are coming out of China and fears of a Chinese devaluation are reducing; and also a weaker US dollar.

ECB unsettles markets

By Wealth Know How in Commentary & Opinion

The European Central Bank sent waves through markets last week when it delivered a package of measures that exceeded expectations. Most notably the bigger-than-expected boost to monthly bond purchases. Calmer conditions did, however, return to markets and global stocks continued to rally.
Unfortunately, the ECB President reinforced the view that the ECB is running out of ammunition. He suggested that interest rates have reached a bottom. It has become abundantly clear in recent years that monetary policy alone cannot address all of Europe’s problems.

Market Wrap 7 March 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 7 March 2016

Oil supports markets whilst US consumers spend up

By Wealth Know How in Commentary & Opinion

The strong rally in oil prices last week helped plump up markets.  But perhaps the more significant news for markets was that data out of the US showed that personal inflation had picked up.
This is the strongest increase since the end of 2012. It indicates that strong employment numbers and increasing average hourly wages are beginning to flow through to the real economy, causing "slack" in the US economy to decrease.

Market Wrap 29 February 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 29 February 2016

Market turmoil – choose your own adventure

By Wealth Know How in Commentary & Opinion

Markets are in turmoil. But why?
The answer depends on which adventure you want to follow. There is a raft of options being thrown around as we try to get our heads around what is causing the selloff. Some of the explanations include:

• OPEC’s inability to cut oil output;
• Sovereign wealth funds selling equities;
• The selloff in Chinese equities;
• Fears of a global recession;

January closes with a bounce

By Wealth Know How in Commentary & Opinion

January was a pretty shocking month for global equities. But it managed to finish with a promising bounce as bulls took heart from the Bank of Japan’s (BoJ) surprise policy easing, along with optimism about the pace of US interest rate rises.

The more positive tone also coincided with a strong rally in oil prices. Brent rose 8% to a three-week high. 

Market Wrap 1 February 2016

By OptionsXpress in Commentary & Opinion

Market Wrap 1 February 2016

Markets spooked as oil leads commodity crash

By Wealth Know How in Commentary & Opinion

What a start to 2016! With a change in calendar year, came a change in investor sentiment - sparking a large sell off in the markets.
There is no sign of a recession on the horizon for the US, Australia, China or globally.  There is no collapse in the banking and payment system like there was in 2008.
Which leaves us with a fall driven by a changing sentiment. Investors appear to think that stocks were overvalued and needed to come down. The oil price along with news out of China were the catalysts for the sell.
To panic or not to panic? That is the question. 

A review of 2015

By Wealth Know How in Commentary & Opinion

The year is almost over. Its biggest event as far as markets are concerned — the first rise in US interest rates in almost a decade — is still ahead, but now seems a certainty.
At the outset of 2015, there was a consensus that the Federal Reserve would start to raise rates, and that the European Central Bank, far more reluctant to ease monetary policy, would be obliged to resort to quantitative easing to support its economy.
The Federal Reserve, following the broadly positive US employment report for November, is almost certain to raise rates this month. The ECB last week has cut rates and extended quantitative easing again.

Market Wrap 30 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 30 November 2015

Christmas cheer returns to markets

By Wealth Know How in Commentary & Opinion

Despite the horrific attacks that took place in Paris last Friday and subsequent terrorism-related events, the traditional Christmas rally in equities looks to have begun with a reversal of the sell-off from two weeks ago.
Equity investors appear relaxed and also increasingly comfortable with the prospect of a US rate rise, which is looking more and more likely to be announced by the US Federal Reserve at its mid-December meeting. 

Market Wrap 23 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 23 November 2015

Market Wrap 16 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 16 November 2015

Odds of a US rate rise rocket

By Wealth Know How in Commentary & Opinion

The US Federal Reserve will step back on to centre stage this month with everyone wanting to know whether they'll hike rates in December. The market had only given a 35 per cent chance to a December rise, but this flipped dramatically to 70 per cent when the latest US employment report was released.
The game changing report was strong in all aspects - the unemployment rate, the number of new jobs and a fall in the under-employment rate to less than 10 per cent – but most importantly, there was a strong increase in wage growth - the strongest annual wage growth since mid-2009.
Of course, there is still one more employment number due out before the December meeting so it's not a given that rates will be hiked.

Market Wrap 3 November 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 3 November 2015

The six Cs that turned the market

By Wealth Know How in Commentary & Opinion

If you were wondering what has caused markets to turn, you need to take a look at the six Cs – China - consumer demand – commodities – currencies - central banks and company earnings.
Let’s take a look at each one.
Recent data out of China indicates that growth is stabilising and fears of a hard landing were overstated.  Also recent flash PMI numbers for advanced economies showed activity is picking up. Claims that the global economy is in the throes of a broad-based downturn have been exaggerated.

Market Wrap 26 October 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 26 October 2015

Commodities turn and equities rally

By Wealth Know How in Commentary & Opinion

The two big stories dominating the news last week were the upturn in global stock markets; and the rally in commodities prices.
Oversupply issues have plagued commodity markets of late but a bunch of recent events suggest the tide may be turning.
The rally in prices that we saw last week came off the back of geo-political events in Syria.  Whilst we caution that the path ahead for commodities may not be smooth; we do believe the turn is near, if not already underway. 

Market Wrap 6 October 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 6 October 2015

Fed holds rates, upsets markets

By Wealth Know How in Commentary & Opinion

Chair of the US Federal Reserve, Janet Yellen, has sought to calm markets by saying a US rate rise is likely to happen this year. Her comments come after the Fed kept rates steady at its September meeting, which added to the volatility we are currently experiencing in the market.
Many may have thought steady rates would be good news for global markets, but not so. The Fed's failure to raise rates reinforces investor concerns about the health of the world economy, particularly China.
If the Fed really wanted to alleviate concerns, it should have hiked rates at their meeting. 

Market Wrap 28 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 28 September 2015

Markets await Fed response

By Wealth Know How in Commentary & Opinion

This week is going to be all about the US and the Federal Reserve's decision on whether it will raise interest rates. The market has only put a 30% chance on a rise but personally I think it’s too close to call.

With the Fed currently in a blackout period and no other major economic news due out this week, the market is patiently waiting. The uncertainty around their decision has caused volatility in the market – possibly more than we would see if they did actually announce a hike.
Of course, even if the Fed doesn’t raise interest rates this week, it is likely to begin tightening monetary policy very soon.
 

Market Wrap 14 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 14 September 2015

Market Wrap 9 September 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 September 2015

China fears spark market movements

By Wealth Know How in Commentary & Opinion

Fears over a slowdown in Chinese growth sparked an aggressive sell-off and global markets fell sharply at the beginning of last week. However, a surprisingly strong rally towards the end of the week saw markets recover some of their losses.
Uncertainty around the next Fed interest rate move compounded confusion in the market, and will continue to be a driving force in market movements in the coming weeks.

Market Wrap 31 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 31 August 2015

Market Wrap 24 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 24 August 2015

Shock waves from the rumbling Renminbi

By Wealth Know How in Commentary & Opinion

China sent shock waves through global commodities, interest rates and stock markets last week when it undertook the biggest devaluation of its currency in almost two decades.
However, the devaluation was actually not that big – with the People’s Bank of China devaluing by only 1.9 per cent.
So why did the market react so strongly?

Market Wrap 18 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 18 August 2015

Market Wrap 12 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 14 August 2015

Market Wrap 3 August 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 3 August 2015

Market Wrap 27 July 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 27 July 2015

China fails to excite Gold prices

By Wealth Know How in Commentary & Opinion

Last time I appeared Greece was centre stage with its referendum just hours away. Fast forward two weeks and the drama has eased a little with a new bailout proposal on the table. However this won’t be the solution Greece needs - and there will be further political fallout.
Now the news of Greece is ‘so last week’ with major stock markets around the world posting strong gains as concerns not only eased about Greece but also about China.  Well-received US earnings reports also aided markets.

Market Wrap 20 July 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 20 July 2015

Australian Dollar being driven lower by China

By Wealth Know How in Commentary & Opinion

The eyes of the world are focused on Greece.  This week its’ people went to the polls to decide their financial future. It’s a tragic turn of events that has the potential to undermine confidence in Europe.  But in my opinion China is a much bigger story.  Indeed - much of the recent selloff in Australia is being driven by the correction in the mainland Chinese share market.
But first to Greece where the Greek referendum will have little immediate impact on the country’s situation. People still have access to limited cash.  Bank’s cash reserves look like they’ll run out very soon.
Political leaders now go straight back to the negotiation table – this assumes the creditors will meet with Greece.

Market Wrap 6 July 2015

By OptionsXpress in Commentary & Opinion

Market & Economic Wrap

Market Wrap 29 June 2015

By OptionsXpress in Commentary & Opinion

OptionsXpress Market Wrap 29 June 2015

Greece fails to spook investors

By Wealth Know How in Commentary & Opinion

For almost six years now, we’ve been following the Greece story. Waiting patiently for some sort of resolution and an answer to the question – will Greece default or exit the Euro? And with a negative outcome seemingly possible and not far away, we would expect the market to be getting nervous about the potential flow on effects for investments and the global economy.
Yet, instead of flocking to safety, investors have started shifting from the traditional safe haven of bonds to the more risky domain of equities. Last week we saw the 4^th largest rotation out of bonds into equities in 6 years.

Market Wrap 15 June 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 15 June 2015

Australian banks out of favour – globally!

By Wealth Know How in Commentary & Opinion

Australia’s stronger GDP number released last week has reduced expectations that interest rates will be cut again by the RBA.
This did not help the yield-sensitive banking sector, which was subsequently sold off. In fact, banks have been a major cause of the 3% decline in the Australian market during the past two weeks. 
Much of the problem is coming from overseas investors exiting Australian banks in favour of European and US bank.
The US banking sector is becoming more attractive as US long bond yields rise. Rising yields support overseas bank margins making them more attractive than Australian banks.

Market Wrap 1 June 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 1 June 2015

Signs of global growth picking up

By Wealth Know How in Commentary & Opinion

Equity markets around the world have been subdued the past couple of weeks - with the exception of Australia - which was sold off partly due to the closure of stockbroker BBY.
The recent uplift in consumer confidence in Australia, brought about by the Federal Budget, wasn’t enough to stem the drop in equities.
Likewise, a Budget-related increase in business confidence is unlikely to translate into faster investment. The budget has generated some good headlines for the Treasurer, but at the end of the day the economy and job growth had already begun accelerating before the budget.

Market Wrap 25 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 25 May 2015

Market Wrap 18 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 18 May 2015

Market Wrap 11 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 11 May 2015

Long bonds dominate as the oil price recovers

By Wealth Know How in Commentary & Opinion

Last week was all about long bond yields. And it’s not surprising given German Bunds have gone from 7bps to 70bps in just a few short weeks. In fact long bond yields all around the globe have increased quite significantly since mid-January.
What’s driving them? 

Market Wrap 4 May 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 4 May 2015

15 years later and the NASDAQ finally hits new highs

By Wealth Know How in Commentary & Opinion

It’s only taken 15 years but the Nasdaq Index has finally recovered from the dramatic dotcom bust.  Bell-weather technology stocks like Google and Amazon have helped push the technology weighted index along thanks to high-than-expected earnings.  This is not like the dotcom days when the companies had no earnings.
More broadly in the US, the market is now anticipating a rate hike in September. Eyes will be on the following data this week to confirm or change this view:

Market Wrap 27 April 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 27 April 2015

Market Wrap 20 April 2015

By Wealth Know How in Commentary & Opinion

Market Wrap 20 April 2015

US rate rise – will they or won’t they?

By Wealth Know How in Commentary & Opinion

Expectations of an interest rate rise in the US continue to dominate markets.  The latest minutes from the US Federal Reserve indicated a divide over whether to take the plunge in June or September.
This means every bit of data coming out of the States will be closely scrutinised as people try to guess when the Fed will be prompted to act.  Markets also have dismissed the recently disappointing US employment report as a one off and not a trend. 

Market Wrap 8 April 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 8 April 2014

Muddled markets, mixed messages

By Wealth Know How in Commentary & Opinion

Three things happened in the US last week that caught my attention.
Number one, there was weaker-than-expected demand for long-dated US bond. Two, US equities were sold off. And three, Chair of the US Federal Reserve Janet Yellen said cash is not a good place to store wealth.
With all three asset classes apparently out of favour, where does this leave investors? 

Market Wrap 30 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 30 March 2015

Market Wrap 23 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 23 March 2015

US Dollar leads markets

By Wealth Know How in Commentary & Opinion

It’s all about the US Dollar this week as the currency continues to strengthen, dominating equities, rates and commodities.
It’s the main reason behind the rally in European equity markets – up over 10% since the beginning of the year.  And it’s also contributing to the Nikkei 225 rally, which is now above 19,000 for the first time in 15 years.

Market Wrap 17 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 17 February 2015

Fabulous February – Equities accelerate globally

By Wealth Know How in Commentary & Opinion

February proved to be a great month for equities.  Many records were broken and markets are posting their best monthly performance in years. Here's a roundup of some of the major markets around the world:

Market Wrap 2 March 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 2 March 2015

All eyes on Greece debt drama

By Wealth Know How in Commentary & Opinion

Equity markets continue to perform well; helped along by the bounce back in oil prices; and more certainty around the first US rate rise. However; the eyes of the world are on Greece this week as the country stares down its creditors.
Finance ministers from the euro-zone are trying to reach a deal on Greece that would enable the country to meet its near-term financial obligations.

Market Wrap 16 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 16 February 2015

Market Wrap 9 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 9 February 2015

Market Wrap 2 February 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 2 February 2015

Market Wrap 19 January 2015

By OptionsXpress in Commentary & Opinion

Market Wrap 19 January 2015

Looking ahead at 2015 risks

By Wealth Know How in Commentary & Opinion

There’s always lots of chatter about market opportunities, whether it’s broad macro trends, asset classes or individual stocks. It seems everyone has an opinion about how and where to invest.
 
What you hear far less talk about are market risks, but we all know they can have enormous impact on an investment portfolio.

The importance of financial literacy

By Wealth Know How in Commentary & Opinion

That old saying, “a fool and his money are soon parted”, has never been more apt. But today, even the wise must be wary.
The world of finance is changing rapidly. Although there are more investment options for consumers, more sophisticated products, and no shortage of advice or advisers, the risks and responsibilities for each individual are far greater.

Gazing into the crystal ball – a look at what’s in store for 2015

By Wealth Know How in Commentary & Opinion

Gazing into the crystal ball to look at what’s in store for 2015 is always dangerous, but we thought we would give it a go anyway.  The key theme for 2015 will be the contrasting situations in the US and Europe. We expect the US to see continued economic growth and rising interest rates, whilst Europe will remain largely stagnant and pursuing a program of full-scale quantitative easing.  This will affect currencies, interest rates, stock and commodities.

Market Wrap 15 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 15 December 2014

US markets takes out Gold and Silver - leaves Europe in its wake

By Wealth Know How in Commentary & Opinion

Market & Economic Insights

The results are in – some of the best performing developed market assets for 2014 were US Equities and the US Dollar.  As a result in USD terms the US market has outperformed Europe by the widest margin in 40 years. This widening gap between the US and Europe economies will be a major theme for 2015.

Market Wrap 8 December 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 8 December 2014

Japan weighs on Australian market

By Wealth Know How in Commentary & Opinion

The Australian market has not performed well during the last few weeks as Japan embarks on a program of massive quantitative easing.
This is contrary to the performance of other markets such as the S&P500 which has made new highs. The Nikkei 225 in Japan which has closed up four out of the last five weeks.  Even Europe and other Asian markets have rallied off their lows.
 

Market Wrap 24 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 24 November 2014

Market Wrap 17 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 17 November 2014

US rate rise plausible as jobs data satisfies

By Wealth Know How in Commentary & Opinion

The bond market welcomed the US jobs data released last week which showed a gain of 214,000 non-farm payrolls for October. A surge of 638,000 in the alternative household survey measure of employment also helped push the unemployment rate down to 5.8% in October for the US. 

Market Wrap 10 November 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 10 November 2014

Market Wrap 3 November 2014

By OptionsXpress in Commentary & Opinion

OptionsXpress Market Wrap 3 November 2014

All eyes on equities but US T-Bonds is where it’s at

By Wealth Know How in Commentary & Opinion

Some big moves in the Dow Jones, the S&P500 and, to a lesser extent, the ASX200 have caused discussion amongst investors and prompted suggestions that we are in a high volatility environment.

Market Wrap 27 October 2014

By Wealth Know How in Commentary & Opinion

Market Wrap 27 October 2014

Market Wrap 20 October 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 20 October 2014

Bears grumble as markets decline

By Wealth Know How in Commentary & Opinion

The bears have picked up the scent of the recent decline in equities and are starting to grumble about the potential for a new bear market. Since September, we’ve seen drops of 5%+ for the S&P500; 9%+ for the ASX200; and 9%+ for the Nikkei 225; but we think the bears are getting over excited and September’s drop is unlikely to mark the beginning of a new bear trend.
 

Market Wrap 13 October 2014

By OptionsXpress in Commentary & Opinion

Market Wrap 13 October 2014

4 reasons why the market fell

By Wealth Know How in Commentary & Opinion

Like Australia, many global equity markets have taken a turn downwards, with the falls in the markets closely linked to the rise of the US Dollar.  However, the S&P500 and Nikkei 225 have bucked this trend to hold up pretty well during September.  

Currency markets heat up

By Wealth Know How in Commentary & Opinion

 Two events are set to grab the markets attention this week; the outcome of the US Federal Reserve's policy meeting; and the referendum on Scottish independence. Both are important for currency markets, which is where most of the action has been taking place recently. 

September setback?

By Wealth Know How in Commentary & Opinion

As the northern hemisphere enjoyed its summer holidays, markets hotted up with global equities rallying in August.  But as the north returns to work – including the central banks – we wonder if volatility will return during September. 

Equity markets’ zombie dance

By Wealth Know How in Commentary & Opinion

Just when you thought equity markets were looking shaky, they’ve taken us by surprise and popped back to life like some sort of zombie back from the dead.
Around the world, the US, Asian and Australian markets performed well last week making up for most of the losses of the past month. European markets even came back a bit although it was more a stabilisation than a recovery as the issues in Ukraine continued to weigh heavily on the region. 

Why the market pullback?

By Wealth Know How in Commentary & Opinion

Markets took a hit last week as a bunch of factors, including US inflation concerns and a technical default in Argentina, spooked investors.  In our view, there are two main drivers for the pullback....

Market holds its nerve over Ukraine

By Wealth Know How in Commentary & Opinion

As the tragic news of Malaysian Flight MH17 sent shockwaves around the world last week, investors initially responded by jumping out of equities and into safe haven assets.  However, markets calmed down in the days that followed, and are now in wait and see mode on how the West will responds to Russia.

Australians refuse to part with cash

By Wealth Know How in Commentary & Opinion

Employment in Australia is holding steady and wages are rising.  Australians, however, are choosing to hang on to their hard-earned cash. Consumer spending has slowed during the past few months owing to warmer weather and the negative response to the Federal budget. 

What volatility? Markets shrug off global issues

By Wealth Know How in Commentary & Opinion

Despite the latest crisis in Iraq and the renewed escalation of tensions in Ukraine, markets remain relaxed with little volatility. Other potential flashpoints; including the unresolved crisis in Thailand, new terrorist outrages in Nigeria and Kenya; and economic and political instability in Argentina, Brazil and Turkey, have also failed to increase volatility. 

Are investors turning a blind eye to positive indicators?

By Wealth Know How in Commentary & Opinion

Despite a wave of positive numbers – GDP, employment, interest rates, equity markets – investors seem reluctant to pull themselves out of their current state of pessimism. We’re not sure why. 

Investing, not speculating

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Roger Montgomery revisits the fundamentals of value investing.

Market and Economic Commentary – 28 May 2014

By Wealth Know How in Commentary & Opinion

Favourable news out of China last week helped stop the selloff in global markets and push the S&P500 to close above 1900 for the first time in its history. Even the NASDAQ, which was sold off by around 10% at the beginning of the year, has rallied significantly during the past week.

Market and Economic Commentary – 15 May 2014

By Wealth Know How in Commentary & Opinion

Markets are waiting, but it’s not clear what they are waiting for. It may be a combination of factors.  Europe remains constrained by ECB inaction and the threat of the Ukraine.  The US is nervy about low bond yields and the DOW and S&P making new highs.  In Australia we are digesting the new federal budget.

Talking Quality

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Andrew Macken discusses the three main sources of quality to consider when evaluating whether a business is investment-worthy.

Where to from here?

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Roger Montgomery reminds us of the importance of waiting for value to present itself. 

Market and Economic Commentary – 30 April 2014

By Wealth Know How in Commentary & Opinion

Global markets have been treading water during the past couple of weeks.  They are hindered by the Ukraine crisis, the US reporting season, and poor Chinese PMI numbers.  On the plus side speculation that the European Central Bank might loosen monetary conditions has supported the markets.

Market and Economic Commentary - 16 Apr 2014

By Wealth Know How in Commentary & Opinion

The Australian market made six-year highs last week spurred on by strong demand for Australian bonds, equities and the Aussie Dollar. The rally was short-lived and markets were quickly sold off in response to declines in the US and Japan equities. Also some bad news out of China in relation to imports and exports didn’t help.

Equities: Where to next?

By Montgomery Investment Management in Commentary & Opinion

In this video insight, Tim Kelley looks at some of the dynamics we're seeing in the Australian equity market, and what it might mean for your investment portfolio.

Value Investing and the Market

By Montgomery Investment Management in Commentary & Opinion

In this video insight, Roger Montgomery reminds us of the fundamentals of value investing, and the importance of investing in stellar companies, no matter the movements of the market.

Earnings growth: good, not great

By Montgomery Investment Management in Commentary & Opinion

In this week's video insight, Russell Muldoon looks at the reasons behind the market's recent rise in earnings growth, and what it might mean for your investment portfolio.

Market and Economic Commentary - 2 Apr 2014

By Wealth Know How in Commentary & Opinion

First to the Australian Dollar, this reached a new four-month high last week. Many commentators put the rise down to the possibility of China stimulus but we think there is a lot more to the story. In our view, a number of interrelated factors are contributing to the rise.

Market and Economic Commentary - 19 Mar 2014

By Wealth Know How in Commentary & Opinion

The market continues to face a double threat as the crisis in Ukraine persists and fresh fears of a hard landing in China take centre stage. Despite these concerns, the market surprised us over the last 2 week by holding its nerve and not falling nearly as far as expected.

Market and Economic Commentary – 5 Mar 2014

By Wealth Know How in Commentary & Opinion

The issues in Ukraine are very complicated with regions such as the Crimea considering itself more Russian than Ukraine. For the Russian President Vladimir Putin keeping Ukraine within Russia’s sphere of influence is critical and the current game plan seems similar to what the Russia strategy was for Georgia in 2008.

Market and Economic Commentary – 19 Feb 2014

By Wealth Know How in Commentary & Opinion

Recently bad weather and holidays are playing havoc with global economic numbers, but the market seems indifferent with the rally continuing after a sell-off early in the year. Even emerging markets, which took a huge hit recently, are up 7% since the market turned in February.