Weekly Market Update

Markets Mixed as Australia Shows Resilience Amid Global Slowdown Signals

October 23, 2024

Markets were mixed over the last week with Europe and Japan down a few percent and the UK FTSE 100, S&P 500 and ASX 200 proving more resilient. The U.S. economy looks to be holding up well and the debate is shifting from a ‘soft landing’ to a potential no landing while Germany continues to suffer from the Chinese slowdown. 

Australia’s Job Market Powers On Despite Rate Pressures

Australia’s economy remains resilient, with the labour market adding 64,000 jobs (51,000 full-time) and the unemployment rate holding steady at 4.1% for six months. The participation rate rose to 67.2%, and the employment-to-population ratio hit a record 64.4%. NAB’s survey shows one in three firms still face labour shortages. Given strong employment and wage pressures, the RBA has maintained its tightening stance, delaying any immediate rate cuts and signalling that future easing will depend on inflation data. This was reflected in bond yields which pushed higher in Australia and the U.S.

 

China's Economy Slows, but Markets Rally on New Support Measures

China's latest economic data showed mixed results, with GDP growth slowing to its weakest in seven quarters. Despite this, the CSI 300 jumped 3.6% on Friday after new market support measures were announced, including a share buyback program and equity swap tools. While retail sales and industrial production in September saw slight improvements, concerns remain over the declining property sector. The People's Bank of China's gradual approach to stimulus has left markets anticipating more significant fiscal measures

Oil Prices Fall as China Slows and Risks Ease

Oil prices continued their descent, with Brent crude falling 1.9% on Friday to near $73 per barrel, marking a $6 decline over the week. The weakness reflects China's slowing oil import growth and reduced Middle East risk premiums as concerns about potential disruptions to the Iranian energy sectors eased.

 

Q3 2024 Earnings Season

We're still in the early stages of the Q3 2024 earnings season, with only 14% of S&P 500 companies having reported so far. While 79% have beaten Earnings Per Share (EPS) estimates and the overall growth rate of 3.4% marks the fifth consecutive quarter of growth, it’s the lowest since Q2 2023.

A concerning sign is that most of the growth is concentrated in the "Magnificent 7" tech companies—without them, the rest of the S&P 500 would show just 0.1% growth over the past year. Last week, ASML (a key supplier in the tech/AI sector) reported disappointing orders, which raises concerns about potential overbuilding in AI-related infrastructure. As the earnings season continues, markets will be watching for further signs of economic strength in the U.S.

Looking beyond this earnings season, analysts project much stronger earnings growth of 14% for Q4 2024 and 15.1% for 2025, suggesting a broad based earnings rebound is priced in and company outlook statements will be closely scrutinised.

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Delicately Balanced Markets React to Mixed Economic Signals and Political Uncertainty

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US Inflation Decline Triggers Market Shift

August 2, 2024
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A Week of Contrasts in Global Markets: From Record Highs to Renewed Growth Concerns

August 2, 2024
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A Week of Mixed Market Movements: Small Caps Rise as Tech Wavers

August 2, 2024
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Riding the Market Rollercoaster

August 2, 2024
If we had written this commentary early in the week as intended, we would have said that markets were still on the back foot, as they were down another few percent. However, having got to the end of this week things have improved quite a bit and most markets are now actually up a few percent, with China leading the way.
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Rising Rates Rattle Stocks as Geopolitical Risks Emerge

August 2, 2024
This week rates have headed resolutely upwards, and stocks have not liked it much with most markets heading steadily downwards throughout the week.
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Stocks Stumble, Bonds Steady as Growth Fears Loom

August 2, 2024
Equity markets declined over the past week, with the S&P/ASX 300 down -3.3% and the MSCI World Ex Australia index falling 2.7% in local terms, but only -0.9% in Australian Dollar terms for the unhedged Australian investor. Most of the falls happened overnight as a higher-than-expected GDP number put upward pressure on short-term rates.
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October's Financial Flux: A Precursor to Change in Investor Fortunes

August 2, 2024
During October, global markets experienced a downturn amidst inflation worries and the threat of rising interest rates, leading to a 2.7% fall in global equities and a 3.8% drop in Australian stocks, with tech sectors and major companies like Nvidia and Tesla taking notable hits. Despite the gloom, the materials sector saw gains, and gold shone brightly as a safe haven, appreciating by 7.3%.
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Australian Dollar Slides on Divergent RBA and Fed Policy Messaging

August 2, 2024
Most markets were up slightly this week as the US tech stocks led the way for most of the week before falling back overnight as Jerome Powell struck a more hawkish tone, implying that while rates in the US may be near their peak they might have to stay there for a while longer.
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Markets Trek Higher on Approach to Peak Inflation

August 2, 2024
Stocks continued their strong November rally this week, as hopes grew that inflation has peaked and the Fed is nearing the end of its rate hiking cycle. The S&P 500 rose 1.9% on Tuesday following the cooler than expected US CPI print, bringing its gains for the month so far to 7%.
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Markets slid again last week, with a concentrated sell off in US tech

August 2, 2024
Markets slid again last week but the selling was concentrated in US tech, most of which is down 10% or so this year. Much of last week’s selling occurred in the last 2 sessions of the week.
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Recession fears build, yet equity markets end the week higher

August 2, 2024
Fears of a US recession later this year gathered pace last week and the US equity market jumped by almost 7% and the Nasdaq was up some 9%.
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Inflation - Flash Update

August 2, 2024
In light of the recent inflation data coming out of the US, we dive in to why the market is so upset about a 0.1% increase in prices, and what this means from an Australian investor's perspective.
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Interest rate sensitivity persists into the new year

August 2, 2024
During the last few weeks, the prospect of rising interest rate expectations continued to grip markets, as the soft landing/rapid disinflation thesis was tested.
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Strong start to the year continues despite recession concerns

August 2, 2024
As the world’s elite gathered in a snowless Davos, markets focused on much more immediate concerns, starting with the continuing wave of layoffs in corporate America. Amazon, Microsoft, Alphabet (Google’s parent company), Salesforce and Goldman Sachs, among others, took turns to announce staff cuts. It would appear boardrooms and CEOs are lending some credence to the possibility of a recession in 2023.
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Equities turbulent but resilient as interest rates rise

August 2, 2024
Last week the S&P 500 traded in a 3% range, having done a 2% round trip on Thursday, followed by a 3% fall on Friday after the inflation data release and then another almost 2% round trip yesterday. Emerging markets were the worst performing, down 4% for the week. Taking a step back though, most equity markets haven’t given back that much of their gains from January, while Europe and the Nasdaq remain up 10% for the year.
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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.
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Carbon credits and investing – is it the outcome we expect?

August 2, 2024
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Better World makes a difference with investment in renewables

August 2, 2024
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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.
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‘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.
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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%.
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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...
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