Earlier this week it was announced that $45bn was wiped from Australian equity markets, but despite a quick turnaround, headlines of a "$45bn recovery" are nowhere to be seen. Perhaps for good reason? Perhaps not.
With increased market volatility comes increased market noise - the media loves a good market sell off as it gives them a great dramatic headline.
So what's really happening out there?
Well, as always, there is much to consider for company CEO's and Boards and policymakers as well.
Chair of the US Federal Reserve Bank (Fed), Janet Yellen, has sought to calm markets by stating that the much anticipated US rate rise is likely to still occur later this year. This was on the back of the Fed's decision to not increase rates at their September meeting, which in turn caused much of the volatility seen in the US markets since then. So why is that the case if the US economy is experiencing strong growth and strong employment?
One of the key reasons for hesitation from the Fed is no doubt the Chinese economy and more specifically, determining the pace and extent of the slowdown they are experiencing in economic growth as they come off an extended period of record growth. Add to this the commodity price falls witnessed over 2015, falling oil price and concerns about extended over-supply of oil in global markets, continuing uncertainty in Europe, ongoing geo-political turmoil in the Middle East and concern about financial stability in Emerging Markets and you have enough uncertainty to cause any investment market to behave as they have been recently.
Given the current environment, we remain cautious of various sectors in the short to medium term however, we are comfortable with our current portfolio holdings and long term view on markets as a whole.
Uncertainty is the fuel for volatility in investment markets - this has always been the case. The only thing we are certain about is that there will be more uncertainty in the future!
That's why we remain focused on managing your investments with regard to your circumstances and to deliver to your individual needs - that role never changes for us.
Enjoy your long weekend.
Manager - Investments
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We have relied on the Team at 360Private for accounting and financial advice for over 30 years. Their sound strategy enabled our investments to perform well even through the Global Financial Crisis and we have benefitted from their knowledge of taxation law and superannuation. On a day to day level, we are always able to get prompt replies to any accounting matters relating to our business and everything is explained in language we can understand, rather than in "accountant speak". Our children now have their own businesses too and they also rely on 360Private.
- Sandra Haese, Director, Haese MathematicsRead more ...