News

October proved a dark cloud for equity markets. In Australia stocks fell as much as 9% during the month to recover somewhat, but still finish 6% lower. This was a similar return for US equities, but Asian markets underperformed with the Japanese bourse falling 9%, and the Shanghai Composite closing 7.7% lower. For Australian stocks, there were some clear winners and losers in the month. The winners were gold related given the market volatility… & the losers had their own unique issues (AMP -22%, Kogan -50%, & Corporate Travel Management -34%).

The S&P500 hit record highs despite President Trump announcing further tariffs. This time around he added 10% to an additional $200b of Chinese imports, which are to rachet up on Januray 1st 2019 to 25%. China responded to the latest round of tariffs by announcing 5-10% tariff increases on $60b of US imports. The US Federal Reserve lifted interest rates (as expected) by 25bps to 2.25%. The ASX200 lagged offshore markets by finishing the month 1.3% lower. The Royal Commission into Banking released an interim report, and Energy & Mining stocks rallied on stronger commodity prices.

The Australian dollar fell below 71c on Friday, a level not seen since 2016 when oil fell to around $30p/b. This time around, oil is healthy and trading at well over twice that price. So what has triggered the weaker Aussie?

President Trump is shaking up the status quo of global politics. His main game has been to reverse the unfair advantage he believes China has had in the US economy. China has amassed an almost $30b trade surplus from net exports to the US, exporting everything from Christmas lights, t-shirts, and steel. His laser like focus on China has seen him levy tariffs of $50b, and now upping the ante to $200b.

Headlines around the world are flashing serious concern over recent developments in Turkey. How can a country that has its total market capitalisation of companies listed on the stock exchange worth less than Netflix cause such panic and havoc?