Recession fears build, yet equity markets end the week higher

June 27, 2022
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%.

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%. This underscores how sensitive stocks have become to interest rates and reflects a fairly modest moderation in interest rate expectations and the thought that inflation pressures would moderate with a sharply slowing economy.

There may have also been some technical factors at play with some important indices rebalancing combined with fairly oversold markets. Most surprisingly though it was the week when Jerome Powell conceded that a recession was likely and the New York Fed estimated that the chances of avoiding a recession had decreased to 10%.

The prospect of the lower future interest rates that that prognosis implies meant that all the tech titans that have dragged the market down so far this year led the market up with rises in Apple, Microsoft and Tesla contributing the most to gains last week. The specific catalysts that sparked this rally was weaker than expected producer activity in the United States along with worsening consumer sentiment. Commodity prices were a sea of red and the oil price is now down 8% which really explains why all of this bad news is not so bad after all.

Iron ore prices were also down again and falls of around 5% for the local miners weighed on the local market which was only up around 2%, although missing out on a buoyant US trading session on Friday after our markets closed also accounts for much of the difference. The banks on the other hand were up strongly along with CSL and some ‘expensive defensives’ like Goodman Group, Coles and Woolworths.

European luxury goods makers and some pharmaceutical companies also helped that market to more modest gains of 1-2%.  There were also some signs of robust pricing power amongst some corporates with FedEx up on strongholds results and cruise operators also benefitting from surging bookings.

This mixed picture extended to bond markets which continued to be volatile but ultimately yields were down and especially in Europe which is seen to have more constrained policy options than the US. A university of Michigan estimate saw long-term inflation expectations ebb from 3.3% to 3.1%, while the equivalent bond market implied measure (the so-called 5 year-forward rate) actually been pretty steady at just over 2% per annum, heavily implying that the market still has a high degree of confidence that the inflation surge will be beaten or give way to deflationary forces in the next few years.

Value and growth in emerging markets with Trinetra - the best of both worlds?

August 2, 2024
Jonathan Ramsay is joined by Trinetra Investment Management's Tassos Stassopoulos to discuss value and growth in emerging markets and whether the asset class offers investors the "best of both worlds."
Read More

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%.
Read More

There was nowhere to hide last financial year

August 2, 2024
There were very few major asset classes that have offered positive returns over the year with cash being one of the few places to hide and perhaps gold.
Read More

Valuation vs foresight - part 1

August 2, 2024
Read More

Are the tides changing or is it just a mini rally?

August 2, 2024
Markets jumped last week, especially those in the US where the Nasdaq was up almost 3%, for reasons that no-one can quite agree on.
Read More

July 2022 Global Macro Update

August 2, 2024
Read More

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.
Read More

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.
Read More

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%.
Read More

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.
Read More

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.
Read More

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.
Read More

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.
Read More

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%.
Read More

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.
Read More

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.
Read More

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.
Read More

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.
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