Weekly Market Update

Fed Holds Steady as Global Markets Respond to Mixed Economic Cues

May 4, 2024

Despite some volatile swings, the first week of May ended up being a reasonably positive one for markets. Emerging markets and global small caps rallied a few percent, helped ironically by weaker economic data out of the U.S. A dovish statement from Fed Chair Jay Powell mid-week initially boosted markets, but earnings disappointments from companies like Starbucks, pointing to economic weakness, erased the gains. However, a weaker than expected U.S. jobs report on Friday was taken positively, as signs of a softening labor market and dissipating inflationary pressures raised hopes of a Fed rate cut. U.S. 10-year Treasury yields pulled back from recent highs on the news.

Looking back at April, U.S. markets were volatile, with the Nasdaq and S&P 500 down as much as 6% and 4% respectively at one point on worries about stubbornly high inflation and interest rates. However, they pared losses to end the month down around 2%. Australia (-3%) also saw some weakness on lingering inflation concerns. The standouts were emerging markets and the UK, both up nearly 4% in April. China rallied strongly late in the month as authorities got a handle on the property market and amid shifting U.S.-China trade sentiment.

Year-to-date, Japan (+15%) and Europe (+10%) remain the top performing regions. The Nasdaq and S&P 500 have moderated gains to around +6%. Emerging markets have climbed to +5-6% with the recent rally. The trend in interest rates has been upwards, with U.S. 10-year yields rising from 4% to 4.6% before easing slightly last week.

For Australian diversified growth investors, actively managed funds, positioned more defensively than passive funds, lagged in Q1 but have caught up in the past month. Year-to-date returns are around +3%, held back by a steady Australian dollar.

In focus recently are inflation worries and the mortgage situation in Australia. U.S. inflation expectations ticked down last week while remaining steady at 3% in Australia. The implied probability of RBA rates dropping this year has decreased and soem economists are even forecasting more hikes. However, easing is still forecast next year  as the global economy weakens. Average mortgage rates plateauing around 6% are expected to remain rangebound. The RBA believes the pass through effect on mortgages has actually been lessened as fixed rate loans taken out during COVID progressively switch to variable rates through 2024.

Despite some high-profile misses, the U.S. earnings season has been solid so far, with 80% of companies exceeding expectations. Overall earnings growth is tracking around 5% year-on-year in nominal terms, though real growth is more muted.

In summary, markets have proven resilient despite cross-currents and some volatility. Growth has moderated but not fallen off a cliff. Inflation and interest rate concerns are balanced against hopes for Fed easing.

ASX closes higher as cooling US inflation fuels anticipation of rate cuts

May 22, 2024
Read More

Positive Momentum Continues Amid Mixed Signals

May 14, 2024
Read More

April 2024 in review: Volatility and Mixed Economic Data

May 5, 2024
Read More

Fed Holds Steady as Global Markets Respond to Mixed Economic Cues

May 5, 2024
Read More

A tug-of-war between solid corporate profits and gathering macroeconomic headwinds

April 27, 2024
Read More

Market indigestion: Strong US Economic, Data Rising Inflation and market volatility

April 20, 2024
Read More

ASX closes higher as cooling US inflation fuels anticipation of rate cuts

May 22, 2024
Read More

Positive Momentum Continues Amid Mixed Signals

May 14, 2024
Read More

April 2024 in review: Volatility and Mixed Economic Data

May 5, 2024
Read More

Fed Holds Steady as Global Markets Respond to Mixed Economic Cues

May 5, 2024
Read More

A tug-of-war between solid corporate profits and gathering macroeconomic headwinds

April 27, 2024
Read More

Market indigestion: Strong US Economic, Data Rising Inflation and market volatility

April 20, 2024
Read More

Andrew Hunt's visit to New York and some key implications for global markets

September 1, 2023
Last week Andrew visited the InvestSense offices and shared his observations and findings from his visit to the United States, specifically New York.
Read More

Equities turbulent but resilient as interest rates rise

March 6, 2023
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

Strong start to the year continues despite recession concerns

February 7, 2023
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

Interest rate sensitivity persists into the new year

January 16, 2023
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

Inflation - Flash Update

September 15, 2022
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

Bad news equals good news

June 28, 2022
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

Better World makes a difference with investment in renewables

February 6, 2023
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

Carbon credits and investing – is it the outcome we expect?

November 21, 2022
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

Helping your clients assess the climate impact of their Portfolio

June 12, 2022
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

How Mark Lewin saved 13 hours a week with Managed Accounts

January 16, 2023
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

Bad news equals good news

June 28, 2022
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

June 17, 2022
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

June 17, 2022
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
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