Global sharemarkets are looking ugly on the back of Russia v Ukraine

Posted on Thursday, February 24, 2022
The unrest around Russia and Ukraine has given investors that much more to be worried about. With the increase in global sanctions, the market is now pricing in higher energy prices and seeing significant risk aversion. This has been highlighted by the Nasdaq which has now tumbled more than 15% so far this year, while the S&P500 confirmed a correction in the previous session, when the index ended down more than 10% from its 3 January closing record high.   Our share market has only fallen 7%, largely due to a much better than expected reporting season from the banks and the big miners. So where to from here? Do you just ride the wave, or trade? For most of us who are invested in superannuation, our employers are making contributions at weekly, monthly or quarterly intervals, so we are buying into this market.   For others it depends on your risk profile and what I like to call the ‘sleep test’.  That is, can you sleep at night with your current or f ... Read the rest of entry »

Ignore the RBA, the CBA has made its rate call

Posted on Wednesday, February 16, 2022
We’ve spoken a lot recently about interest rates and inflation, with the Reserve Bank hinting repeatedly last year that it doesn’t intend to increase the official cash interest rate until 2024. But it appears the tides are changing, and that interest rate increase could come sooner than expected. Last night on Money News I interviewed Gareth Aird, the head of Australian Economics at the Commonwealth Bank. Mr Aird gave us some insight as to how the CBA sees the next 12 months playing out, and it’s not great news. The CBA expects: the RBA will lift rates by 0.15% in June. the RBA will make 3 more rate rises by the end of the year, as they rarely do a singular rate rise. the CBA sees inflation growing by around 1.5% for the March quarter. 2023 will see double-digit percentage falls in the property market. What does that mean for you and me? The obvious answer is increased mortgage costs for property owners, and increased rents for tenants. That might seem obvious, bu ... Read the rest of entry »

You've heard of COVID-tentativeness, but what's petrol-tentativeness?

Posted on Wednesday, February 9, 2022
Investors across the world are quickly coming to terms with the new normal: higher interest rates. Reserve banks in New Zealand, the US and UK have either increased rates already, or said they’re going to do so soon. But not in Australia, where with a federal election looming, the RBA is going to sit on its hands for at least a while longer. However, unlike the RBA, inflation doesn’t have the option to sit around and watch the show and is steadily on the increase. This week the world is watching how the US Federal Reserve will react to intensifying price pressures, with many investors eyeing Thursday's consumer price index data release (Friday morning our time) as a key event for markets this week. The inflation data is expected to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, which would be the highest in almost 40 years. So, while we may not be feeling the pain on our mortgages just yet, we can expect to feel it at the bowser with petrol prices set to push throu ... Read the rest of entry »

Things to watch in 2022: inflation, interest rates, and unemployment

Posted on Wednesday, February 2, 2022
Welcome to 2022, and as we enter our third pandemic year it’s a good time to pause and look ahead to what we can expect from another year of twists and turns. If we’ve learned nothing else over the past two years, it’s that it takes a brave person to try and look too far into the future, but there are a few things floating on the breeze that are worth paying attention to. First, let’s talk about the share market. It’s going through a very volatile period and last week went into a “correction”, which means it dropped 10% of its value very quickly. For investors – whether you invest directly or through your superannuation – this means losses, which is something we haven’t really experienced since the pandemic began. What caused the correction? Concerns around inflation, interest rates, and unemployment. Inflation is currently being driven by demand for goods outstripping supply, with global supply chains still struggling to recover from ... Read the rest of entry »