Global markets Global equities enjoyed something of a relief rally over the past week as the world’s financial regulators played ‘whack a mole’ as each new banking problem raised its head. The US S&P 500 bounced back 1.4% after a 4.5% decline the previous week. The past two weeks have seen bond yields plummet, which has helped partly insulate equities from concerns about financial instability and a severe tightening in credit. As would be expected perhaps, yield-sensitive areas such as technology have fared best, while banking stocks have been pummelled. The NASDAQ-100 index, for example ..read more

There has been a notable shift in the economic landscape in both the US and Australia over the past month – but in opposing directions. In the US, a range of economic data has surprised on the upside – such as employment growth, service sector activity and even consumer prices. In Australia by contrast, economic data over the past month or so surprised on the downside. December quarter GDP growth and the Wage Price Index were both softer than expected, retail spending slowed and the January monthly CPI report was also lower than expected. In a speech at the Australian Financial Revie ..read more

After a relatively benign start to the year in financial markets, volatility has reared its head again over the last week. Banks have failed, equities have been sold off, bonds have rallied, and US regulators have stepped in to reassure markets. For those with long enough memories, echoes of 2008 can be heard. But despite the apparent similarities, what’s happening under the surface is very different to the Global Financial Crisis. So what happened? And should investors be concerned? A prelude On 8 March, a relatively unknown American bank called Silvergate, which specialised in banking for th ..read more

Bitcoin and the broader crypto market ended the week lower for the second consecutive week and the total crypto market cap hit a low not seen since November. The major catalyst for lower prices was the fallout and implosion of crypto-friendly bank, Silvergate Bank. As at 12 March 2023, bitcoin was trading at US$20,549. Ethereum outperformed bitcoin over the week, down 6.21% vs bitcoin’s 8.39% loss. Bitcoin’s market capitalisation fell to US$397 billion, with the total crypto market back below US$1 trillion at $950 billion. Bitcoin’s market dominance was at 41.8%. Price High Low Change fro ..read more

Global equities suffered a setback last week, resuming the downtrend in prices which has been evident since stronger-than-expected US economic data and “no landing” fears began to upset investors at the end of January. The week began with hawkish comments from Fed Chair Powell suggesting US rates may need to go higher than previously expected and opening the door to a potential return to 0.5% rate increases at the next policy meeting later this month. This naturally saw equities retreat and bond yields move higher. Notably, however, US 10-year bond yields barely budged while 2-year bond yields ..read more

Major asset class performance Hopes of a soft landing for the global economy – with inflation falling without the need for a recession – have supported both bond and equity markets in recent months, along with gold. Soft landing hopes gave way to ‘no landing’ fears in February, however, with renewed signs of resilient global economic growth and persistent inflation, which saw markets price in additional central bank rate hikes in coming months. In turn, this pushed up bond yields and the $US, while pushing down returns from bonds, equities and gold. In hedged terms, global equities declined ..read more

While its long-term outperformance has been well documented, Quality investing has also garnered attention due to its defensive attributes during time of market weakness. However, during last year’s sharemarket drawdown, instead of providing its usual ‘cushion for the fall’, quality companies fell even further than the global benchmark. We dissect the key drivers behind last year’s market fall and identify two key reasons which explain Quality’s relative underperformance, as well as two reasons why 2023 might just present a favourable landscape for Quality portfolios. What is Quality? Quality ..read more

Global markets Global markets enjoyed somewhat of a reprieve last week, with steadier bond yields helping stocks lift for the first time in three weeks. The $US also eased. That said, US 10-year bond yields did briefly break above 4% last week for the first time since November. In a fairly data-light week, markets appeared to latch onto comments from a few Fed officials suggesting that the bout of recent strong US inflation and activity data likely won’t prompt the Fed to lift rates by 0.5% at the March 21-22 policy meeting – instead it may well stick with the smaller 0.25% move seen back in ..read more

It’s an age old question, is it possible for a person to time the share market? All the data seems to be pointing very firmly to no. It’s simply too hard to do. Many investors try to pick the bottom of the share market to take advantage of any following rebound. This approach is referred to as ‘market timing’ and involves making investment decisions based on short-term market movements. In contrast, a buy-and-hold approach involves buying shares and holding them over the long-term, irrespective of market movements. An overwhelming body of research finds that this passive buy-and-hold, long-ter ..read more

Global Markets Stronger than expected activity data and stubbornly high consumer price inflation saw US stocks fall and bond yields rise for the third week in a row. Firm recent US activity and inflation data have markets fretting over a potential “no landing” economic scenario in which the Fed is forced to jack rates up even higher to slow the economy and bring down inflation. A strong US S&P service sector reading for February, which also revealed a lift in price pressure, unnerved market sentiment last week. That was followed by hawkish Fed minutes which gave no hint at a pause in the ..read more