Well, today has certainly been interesting.
The US Stock market has dropped on the back of some interest rate speculation and wages growth information.
The ASX All Ordinaries Index has followed Wall Street’s lead and corrected when stock markets opened this morning at 10am.
It was expected that the Australian share market would follow in kind and that there will be some market volatility on the Australian Stock Exchange over the next couple of weeks.
In their market update issued today, Jamie Nicol from DNR Capital indicated that the pullback was a response to US interest rate increases and wages data.
Furthermore, Jamie went on to say “Overall the global economy is in strong shape at present and the market pullback is a valuation adjustment in response to the move up in interest rates. Computer generated sell programs can exaggerate the move (as they exaggerate it on the way up). We will be looking to add to positions which suffer disproportionately”. Jamie Nichol – Chief Investment Officer from DNR Capital.
Economists across the board are still very positive about the Australian and Global Markets.
Late last month I was reading an AMP report where Economist, Dr Shane Oliver, provided an outlook for 2018. (The link to the entire article is provided at the bottom of this post.)
The report was dated 24th January 2018, just on 2 weeks ago, where Shane Oliver states “2018 is likely to remain good for diversified investors. The investment cycle still favours growth assets over cash and bonds. But expect more volatile and constrained returns as US Inflation starts to turn up.”
What we have seen in the past couple of days is exactly that, US Inflation has forced up interest rates and the market has responded.
We believe that this volatility will be short lived, however, I also believe there will be some volatility over the upcoming weeks and potentially for a longer.
In a fund managers’ world, this type of volatility represents an opportunity to sell out of positions for Capital Gain and to reposition the portfolio for future growth (ie buying opportunities).
In a Mum and Dads investor’s world, I fully understand that investment volatility on the share market can cause some anxious moments so I am happy to fully explain what is currently happening in global markets and how this affects you and your portfolio.
If you have any questions, or you would like to organise an appointment, please contact me on 0437 110 000 or via email email@example.com
Link to AMP Capital:
2018 – a list of lists regarding the macro investment outlook. Posted 24 January 2018
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