outlook Archives - Jennings Financial Services

No Grizzly Bears in This Market

An article by Shane Oliver; Share markets remained under pressure last week but I remain of the view it’s unlikely we’re sliding into a grizzly bear market as conditions aren’t in place for recession in the US, globally or Australia US shares fell 3.8%, Eurozone shares lost 1.6%, Japanese shares fell 0.2%, Chinese shares fell 3.5% and Australian shares declined 0.3%. Reflecting the “risk off” tone bond yields fell, credit spreads widened and commodity prices fell, with the oil price down another 11% over the last week, leaving it down 34% from its high in early October. The $US rose slightly and this weighed on the $A. Shares retesting October lows – double bottom or resumption of the slump? Share markets fell back to around their October lows over the last week. A retest of the lows is quite normal after the sort of fall we saw in October. Whether markets form a double bottom and head back up or [...]

The October Share Market Scare

Share Markets Fell sharply in October, led lower by the technology-heavy NASDAQ index in the US. Many major market indices are now in negative territory for the calendar year. A notable feature of market behaviour through October was that Bond markets also came under downward pressure. Diversifying into bonds turned out to be a less effective tool in mitigating volatility than in it has been over the last 5 years. Defensive diversified funds with a large commitment to bond markets experienced a disproportionately large increase in realised volatility. This article seeks to provide an explanation for the downturn and address the outlook for share markets. The main points are: The fall in equity markets appears to have been triggered by a sharp rise in US bond yields; It’s a feature of share markets these days that when they fall, they fall sharply; While the rise in bond yields was driven by growing confidence that US economic activity is likely [...]