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.

Markets start to believe central banks are genuine about tightening

August 2, 2024
The relative calm that markets had enjoyed during most of the Ukraine war broke last week, perhaps reminding us that financial conditions remain a key concern for markets in ways that are often less obvious than attention gapping geopolitical headlines.
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Quantitative Tightening (QT) with Hunt Economics

August 2, 2024
We discuss Quantitative Tightening with our colleagues from Hunt Economics. With indicators continuing to show the risk of increasing inflation, central banks are looking at strategies to curb the inflation risk.
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A quiet week with some swelling volatility

August 2, 2024
On the face of it was a fairly quiet week leading into the Easter break with most markets ending flat for the shortened week; however, you didn’t have to look too far below the surface to find volatility.
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Rising rates and slowing growth, can't have one without the other

August 2, 2024
Slowing growth and rising rates also proved to be a strong headwind to local Materials and IT stocks respectively with both sectors down 5%.
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Highest inflation print in Australia since 2000

August 2, 2024
The Nasdaq finished the week with another 4% fall on Friday, closing down 13% for the month and more than 20% year to date. The wider US market was also down sharply and is now down 9% and 13% for the month and year to date respectively.
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Daily Volatility as high as mid-march 2020 levels

August 2, 2024
The US S&P 500 was down for the 5th week in a row last week but only by 0.6%, a margin that belied what was in fact an incredibly volatile week. The Nasdaq was up by over 5% on Wednesday only to fall by even more on Thursday.
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Investors attempt to price in the invasion and the ensuing sanctions on Russia

August 2, 2024
After repeated warnings from Western intelligence, which most geopolitical experts were skeptical of, Putin invaded Ukraine. Markets fell sharply, especially in the US, but later rebounded and ended the week flat (or up by 2% in the case of the US).
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Commodity markets continue to climb and push on inflation

August 2, 2024
It was another volatile week for stock markets, and even more so for commodity, currency and bonds as investors struggled to digest the implications of expelling Russia from the global economy.
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London Metal Exchanges halts nickel trading as volatility threatens solvency

August 2, 2024
It was another volatile week for stock markets, and even more so for commodity, currency and bonds as investors struggled to digest the implications of expelling Russia from the global economy.
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Fed raises rates for the first time in 2 years since Covid

August 2, 2024
For the second week in a row, markets looked through the current horrors of the Ukraine war and were up between 2% (Australia) and some 6% (for the S&P 500). That leaves European markets down slightly since the war started on 24th February, the US level pegging, and the resource rich Australian economy up almost 5%.
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Another week, another odd rally

August 2, 2024
Markets were up again last week for the third week in a row which leaves the US, Japan, and Australia up over 5% and even Europe up a few percent since the invasion of Ukraine.
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March confounded many market watchers

August 2, 2024
Another mostly positive week for shares left markets in positive territory for March despite, or perhaps even because of the war in Ukraine, with Australia, the best performing market up by almost 6%. This was mostly thanks to Energy stocks and in Australia’s case Iron Ore prices as well as the other commodities that we produce.
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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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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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It's going to be a long six months

August 2, 2024
Join Jonathan Ramsay and Andrew Hunt as they discuss what the future holds for the Chinese growth model, Where to from here, and what will the implications be for the west…
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What is a fair way to compare funds?

August 2, 2024
How Can We Do Apple With Apples Comparisons For Industry Funds With Different Asset Allocations And Levels Of Illiquid Investment?
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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.
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.
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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.
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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.
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...
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