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Weekly Brief Sheet - 15/08/22

Updated: Aug 15, 2022

Provides a market round up, a selection of useful data points we use for our investment analysis, and some interesting articles/charts we have noticed recently.

Asset Price Movements

The major global indices have all enjoyed an extended reprieve from the bear market downward pressure and lows of the last few months (albeit in the case of US indexes, on significantly lower volumes than the last twelve months).

US stocks rallied this week after data showed signs that inflation, while still elevated on an annualized basis, had started to slow, supporting the view that the rise in consumer prices may have peaked. Federal Reserve officials reiterated that the central bank still had work to do in taming inflation, but the market still appeared to lower its expectations for a 75-basis-point (0.75 of a percentage point) rate hike in September.

Headline consumer price inflation came in flat month over month, down from the 1.3% sequential uptick recorded in June and below the consensus estimate. On an annualized basis, headline inflation was 8.5%. Food prices increased 1.1% sequentially, an acceleration of 0.1 percentage point.

However, energy prices dropped 4.6% sequentially, while gasoline prices declined 7.7% matching up with the earlier US GDP data showing the release of US strategic petroleum reserves is taking the edge off. How long that can be sustained from already historically low reserve levels is yet to be seen.

Core inflation, which excludes volatile food and energy costs, was also below estimates and unchanged from the prior month. Meanwhile, the year-over-year increase in the producer price index fell 50 basis points sequentially to 9.8% in July, registering the first pullback in the headline number since April 2020.

Down under, the ASX has enjoyed similar uplift as the rebound from tax loss selling season continued. A strong performance from energy stocks - the sector rose 2.3 per cent thanks to a 3.7 per cent lift from Woodside Energy - could not compensate for a broad pullback that saw the property sector, tech, health and consumer discretionary sectors all drop more than one per cent as markets embraced the reality that interest rates will likely need to go higher.

ASIC this week also released a report on Retail investors (REP 735) capturing retail investor motivations, attitudes and behaviours in the period following the onset of the COVID-19 pandemic.

The research surveyed 1,053 Australian retail investors aged 18 and over who had directly traded in securities, derivatives or cryptocurrencies at least once since March 2020. Conducted in November 2021, the survey results provide a point-in-time snapshot of investor behaviour during a period of increased activity in retail markets, supplementing existing market data and research conducted in Australia and overseas.

Most notable was the fact that Cryptocurrencies were the second most held asset, behind equities. The report showed only one in five cryptocurrency owners (20%) considered their investment approach to be ‘risk-taking’.

Links:

 

Misc. Topical Charts:

US recession indicator yield curve steepness
real wages
USA
initial jobless claims
USA
German power prices
firewood Germany searches


Sectors & Stocks:

ASX Sector returns
SP500 Sector returns
Developed markets returns last 3 months

Bonds & Fixed Income:

Australia yield curve
US yield curve

Commodities:

Base & precious metals
Energy resources

Currencies:

AUD foreign exchange rates AUDGBP AUDUSD
 

DISCLAIMER: This report has been prepared by H&G Investment Management Ltd (ACN 125 580 305; AFSL 317155) to provide you with general information only. In preparing this report, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither H&G Investment Management Ltd nor its related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. You should obtain a copy of the Information Memorandum before making a decision about whether to invest in this product.

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