MONTHLY VIEW - JULY 2020

Investor returns in the June quarter have been very strong. Economists have argued that share markets have become disconnected from real world conditions. While these concerns are valid there are also grounds for the rebound as a business recovery is underway and massive liquidity has been injected into the financial system.

MONTHLY VIEW - JUNE 2020

Despite most of the world remaining in lockdown of one form or another, share markets continued to rise in May throughout the world. In part the improvements reflected relief as progressively the restrictions on daily life were removed and the prospect of economic activity returning to pre-COVID 19 levels was glimpsed.

MONTHLY VIEW - MAY 2020

Share markets throughout the world bounced in April. After the large falls in March prices recovered strongly. The American NASDAQ market was up 15.5%, the largest monthly increase since 2000. New Zealand shares also improved with the NZ 50 index up 7.5% in April.

MONTHLY VIEW - APRIL 2020

COVID 19 has impacted all asset classes and all countries. Equity values have quickly fallen, and already low interest rates have been driven even lower.  The speed of the virus onset and its reflection in investment markets has been unprecedented with the decline the steepest in the S&P500 since 1929.

MONTHLY VIEW - FEBRUARY 2020

Investor optimism for the year ahead has already been challenged in January by non-economic events. The year commenced with an escalation in hostilities between Iran and the United States.The protagonists were able to calm relations and avoid escalation. Specifically, in Australia the bush fire season has been particularly severe with over 5 million acres burnt. This was subsequently followed by the Coronavirus outbreak in China.

MONTHLY VIEW - DECEMBER 2019

Sharemarkets regained confidence in November. Both the US and New Zealand equity markets achieved record highs.

MONTHLY VIEW - NOVEMBER 2019

Investors are considering market information as to whether to retreat to safety or continue to pursue returns from more risky positioning. October returns were driven by sentiment relating to the immediate impact of interest rate policy and the ebb and flow of US China trade negotiations. Consensus economic growth outlook improved over the month.

MONTHLY VIEW - OCTOBER 2019

Equity markets were generally up in September. Gains in local currency of between 1% and 2% for the month were achieved. Australia and New Zealand recorded a photo finish in local terms. Both markets were marginally behind the S&P500’s return in local currency for the month. In New Zealand top performers included Kathmandu (+23.2%) and Fletcher Building (+16.0%). Both companies are in cyclical businesses and have operations in Australia and New Zealand.

MONTHLY VIEW - SEPTEMBER 2019

The fall in global and local interest rates has continued over August and fixed interest investors have continued to ratchet down expectations as to where interest rates may finally settle. Downward pressure in interest rates has not been confined to those countries with positive rates. Despite the seemingly unsustainable nature negative yields became even more negative over the month.

MONTHLY VIEW - AUGUST 2019

We have previously discussed the important role monetary policy plays to support sharemarkets and stimulate economies and recent events certainly reinforce this.