Fatigued markets sit and wait
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.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 26 Oct 16
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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.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
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.
All eyes are currently on the US Presidential election. Markets are anticipating a Clinton win, with the expectation the Democrats will win the Senate whilst the Republicans will win the House. If Trump fails to get 40% of the popular votes and let’s face it – he’s not doing his party any favours, the House may also go the Democrats. Currently the polls show Trump with 45% of the popular vote.
Whilst this would make it easier for Clinton to get policy approved, the market won’t necessarily be happy with the outcome given the Democrats’ recent shift to a more protectionist stance.
Diverging economic outlooks and policies between the US and Europe have helped push the US Dollar higher whilst the Euro hovers around seven-month low.
This came as the European Central Bank decided to leave policy on hold at its Thursday meeting. President Draghi also signalled that asset purchases would not end abruptly. The market took this as a sign that the quantitative easing program will be extended past the March 2017 date.
There is also divergence in inflation expectations between the EU and US. Expectations are growing that inflation in the US will rise and, in response, we are beginning to see traders increase their exposure to rising inflation – especially as the price of gasoline and oil continue to rally.
Positive commentary has been circling emerging markets recently as issues in Brazil seem to be coming under control – they even cut interest rates last week.
Emerging markets are now better placed to withstand potential shocks from an increase in US rates. External vulnerabilities have been reduced, equity valuations are generally not high and many markets should receive support from rising commodity prices and improving outlooks for economic growth.