Worries about the US trade wars and global growth are continuing to cause volatility in investment markets. While the risks have increased, we remain of the view that recession is unlikely. Share markets may still fall further on trade war fears and this may even be necessary to remind both sides of the need for a deal. However, we regard the fall in share markets .....
The Reserve Bank of Australia lowered interest rates in June by 25 basis points to 1.25 per cent, and again in July by a further 25 basis points - moving the official cash rate to 1.00%.
The local currency was hampered by the sell-off in global share markets, mixed domestic housing data and further weakness in the Chinese yuan. The ‘Aussie’ dollar declined 2.1% against the US dollar and was similarly weak against a trade-weighted basket of currencies.
It’s understandable that the recent sharp sell-off on financial markets has left investors feeling particularly nervous. The main concern has been the US Federal Reserve’s shift in monetary policy from low rates and printing money to rising rates and the withdrawal of that printing policy. But there’s also a lengthy worry list of issues that we hear continuously: the US trade conflict with China, issues around the leadership of President Donald Trump, and the economic and budgetary implications of the populist government in Italy.
For years now, many have told us that Australia is heading for an imminent recession. By contrast official forecasts have long been looking for several years of above trend growth. In the event neither has happened and we don’t see them happening anytime soon. Against this backdrop there are five things you should know about the Australian economy.
Investing in markets means volatility. When done well, you are getting paid for taking on risk. So why is it that sharp drops in the market have such a visceral impact on us? We only have to go back to early February