Weekly Market Update

Disinflation driven impulse jump-starts a broad rally

July 20, 2023
Most markets were up last week and while tech stocks and AI beneficiaries continued to lead the way the rally was more broad-based than we have seen recently, with most sectors and markets up by 2 - 5%.

Most markets were up last week and while tech stocks and AI beneficiaries continued to lead the way the rally was more broad-based than we have seen recently, with most sectors and markets up by 2 - 5%. The overall market mood around the world was lifted by a benign inflation print in the US which suggested that inflation was subsiding in even the ‘stickier’ services sectors, while a good start to the corporate earnings season in the US also helped. In Australia, the disinflationary theme was especially welcome, and yields fell across the maturity spectrum. Ironically, this was probably helped by the weaker data from China, showing how bad economic news can be good news for such an interest rate sensitive economy. That’s the 100 word summary, of the 800 word AI generated word summary, of a total 4000 words from T. Rowe Price, the AFR and Ausbiz. It’s really quite readable, and a pretty clear summary for clients if you are interested.

So, what do we think is missing from this picture? One positive thing is just how well emerging markets ex-China are doing, especially in Eastern Europe and Latin America. The other side of that coin is that Chinese market returns have been relatively lacklustre, although the market has been highly polarised, and the large tech or EV firms that Western firms tend to be exposed to have been doing well. In recent days Xi Jinping has made it clear that the crackdown on these firms is over and is now appealing to overseas investors in his bid to rejuvenate the flagging economy.

The other thing that the AI, markets, and the financial press has spent less attention on is the juxtaposition between strong corporate and consumer data and weak manufacturing data (which tends to be a leading indicator). Last week the UK and Japan both reported falling industrial production, which fits in with a wider picture seen in Germany, the US, and China. Commodity markets on the other hand have been a little more sanguine, having telegraphed some of this weakness over the last three months.

Turning to the bond markets, the market is highly focused on the near-term intentions of central banks (and the US Fed in particular) as well as longer term rates, which both declined last week. One issue that may be slipping beneath the radar is that slowing inflation combined with cautious, determined central banks might actually mean higher real rates and, effectively, unintentionally tight monetary policy. Last week we saw early signs of that, as lowering inflation expectations caused a spike in very short-term real US rates. This may be something to watch out for in the near future, but for now corporate bond markets are unconcerned as credit spreads, even in the junk bond space, continued to fall.

The Implications of Trump's (likely) Clean Sweep: A Turning Point for the Global Economy

November 8, 2024
Read More

Markets Hold Steady with Eyes on the U.S. Elections and Economic Updates

October 31, 2024
Read More

Key Insights from the H&B NSW 2024 Wealth Symposium

October 30, 2024
Read More

Markets Mixed as Australia Shows Resilience Amid Global Slowdown Signals

October 30, 2024
Read More

10-Year Series Part 5: The Anglo Saxon Property Reset and Productivity and Energy that Doesn't Cost the Earth

October 30, 2024
Read More

10-Year Series Part 4: Japan -Euthanasia of the Saver & Eurozone Competitiveness Differentials

October 16, 2024
Read More

Ten Economic and Market themes shaping the next decade with Hunt Economics

September 25, 2024
Read More

Leadership in times of volatility | Geopolitics and inflation with Ambassador Sinodinos

September 18, 2024
Why investors need to stay alert but not alarmed.
Read More

Cooling Job Growth, Falling Yields and Market Volatility

September 17, 2024
Read More

Fed Debates Rate Cut Amid Mixed Economic Signals

September 17, 2024
Read More

August Reporting Season: The Misses and Beats

September 3, 2024
Read More

Equity Markets Rally on Rate Cut Hopes and Positive Economic Data

August 28, 2024
Read More

"What do I tell a client who wants to invest in Crypto?"

August 2, 2024
With 2021 bringing cryptocurrencies into the spotlight for both retail and institutional investors, is there a place for these currencies within client portfolio's?
Read More

The market has a "breadth" problem

August 2, 2024
Join InvestSense Director Jonathan Ramsay and Andrew Hunt of Hunt Economics as they discuss the markets ‘breadth’ problem and how strong liquidity should keep things afloat until February.
Read More

Finding value and maintaining confidence in a FOMO world

August 2, 2024
Join host Toby Potter of IMAP with Nick Kirrage of Schroders and Jonathan Ramsay of InvestSense as they discuss value as a style, and as a driver of conviction when investing.
Read More

Inflation in 2022 - Beware of cross currents in 2022

August 2, 2024
With inflation appearing to be on the way up again, what are some of the possible scenario’s for 2022? Where does inflation go from the zero bound we’ve reached?
Read More

What happened in markets in 2021, and why?

August 2, 2024
Join InvestSense Director, Jonathon Ramsey to reflect on the price action seen in markets in 2021 and what this might mean for 2022.
Read More

We've got a bad case of FOMO, but it's not what you think

August 2, 2024
With valuation still being the lightening rod for when markets react to external forces, the most expensive things tend to move the most. What does this mean for global asset allocators, and what is InvestSense’s position?
Read More

Helping your clients assess the climate impact of their Portfolio

August 2, 2024
Nathan Fradley explains how the ethosesg technology can help you assess and design an ethical portfolio that aligns to an investor’s personal values.
Read More

Carbon credits and investing – is it the outcome we expect?

August 2, 2024
ETFs that invest in carbon credits are now available. Why should we assume that their price will go up over time? And does buying a carbon credit ETF actually contribute positively to emissions reduction? Will it actually generate the outcome investors are expecting? This article explores the issues around investing in carbon credits.
Read More

Better World makes a difference with investment in renewables

August 2, 2024
There are many direct assets and funds that contribute positively to climate action within the InvestSense Better World Portfolios. Meridian Energy is one of the stand-out direct assets in the portfolio with a climate energy focus.
Read More

Bad news equals good news

August 2, 2024
In recent years professional investors have got increasingly used to the fact that good news is bad news for markets because higher interest rates are likely to be necessary, and of course vice-versa. However, last week the effect was stronger than ever and stocks rallied mid-week amidst reports of widespread lay-offs and expectations of a weak US jobs report.
Read More

‘Buy the dip’ opportunism start surfacing

August 2, 2024
The US market finally market caught a bid last week. Early in the week the market was down few percent after an earnings miss by ad dependent social media platform Snap (of Snapchat fame) combined with weak guidance raised more doubts about the economy and economic resilience of tech companies.
Read More

US momentarily dips into official bear market territory

August 2, 2024
The seventh negative week in a row for the US sent it briefly into official bear market territory before it recovered slightly late on Friday. The world’s largest stocks (Apple, Microsoft Amazon and Google) are all down 25%.
Read More

How Mark Lewin saved 13 hours a week with Managed Accounts

August 2, 2024
Mark Lewin was a financial planner, but is now the Director of Back Office Heros. In his planning business he gained significant efficiencies by recommending and implementing managed accounts for his clients. He tells us how...
Read More
Icon of a letter

InvestSense insights, delivered straight to your inbox.

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news