Weekly Market Update

Positive Momentum Continues Amid Mixed Signals

May 14, 2024

The past week saw positive momentum continue across global markets, with strong returns recorded by most major asset classes. This builds on the rebound seen in late April and early May, driven by stabilising interest rates and cooling inflation. However, stickier-than-expected inflation remains a key watchpoint in the outlook for rates and markets.

In Australia, the ASX 300 gained a healthy 1.8% over the week. Small caps slightly underperformed but still delivered a 1.5% return. The real estate sector was particularly strong, with A-REITs up 2.3%. Q1 retail sales data showed volumes declining 0.4%, confirming the subdued consumer environment.

Overseas, developed markets saw robust performance, with the MSCI World ex-Australia index rising 1.9% in both AUD and hedged terms. Emerging markets, while slightly lagging, still posted a 1.1% increase in AUD terms. In the US, optimism grew that the Fed might cut rates later this year. The S&P 500 gained 1% on Monday, while the Dow rose 0.5% and the Nasdaq surged 1.2%.

Bond markets saw yields push higher towards the end of the week, reflecting tempered hawkish expectations due to weaker-than-expected economic data. Australian 10-year yields fell initially but have since risen, while US 10-year Treasury yields settled at 4.448%.

The Reserve Bank of Australia's (RBA) Statement on Monetary Policy (SoMP) and rate decision were key focuses domestically. While rates were held steady as expected, the RBA noted that inflation is taking longer to ease than anticipated. This discussion of potential rate rises, though unlikely, put markers on notice.

In China, April trade data exceeded expectations with imports jumping 8.4% y/y and exports rising 1.5%. However, an unexpected decline in aggregate financing and the threat of US tariffs on Chinese EVs capped enthusiasm somewhat.

For diversified portfolios, this week's broad-based gains across both equities and real assets are encouraging. While pockets of economic resilience remain, especially in the US, the moderation in the pace of rate hikes globally amid cooling inflation is supporting risk sentiment. 

However, the persistence of inflationary pressures remains a crucial factor to monitor and we will get another important US CPI number in the US this week. Economist Andrew Hunt's Demand Pressure Index, an aggregate gauge of inflationary pressures, has fallen quickly to neutral levels, indicating weakening demand, particularly in services sectors like health and retail. It will be very interesting to see whether is already seeping into the inflation data (the markets would probably love that) or whether we need to wait a while longer. This aligns with the notion of a "knife-edge equilibrium" that could tip toward either inflation or deflation, adding further uncertainty. Whether its this week or next month, Andrew thinks the US is tipping from an inflationary to a disinflationary bias again.

Looking ahead, the Australian earnings season will be a key focus, with early results showing mixed but generally stable outcomes. 

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