As you’ve probably noticed, markets have been a little choppy of late! You may be wondering what it’s all about. Hopefully, this will give you a basic insight into what’s been going on!
The primary influences for the recent market falls are:
- The Chinese currency devaluation and share market volatility was met with new government policy aimed at managing risk of further decline and managing investor sentiment. Manufacturing data released on Friday suggests these measures have not had the full desired impact to stabilise growth.
- Other emerging economies are now also facing weaker growth, higher interest rates and higher levels of debt.
- If the US raises interest rates for the first time in 9 years this September, emerging economies will be likely to face even more headwinds that will contribute to their effect on global growth.
Recent market activity and what lies ahead are:
- While the markets move to price for weaker growth can be justified and is likely overdue, it is being questioned as to whether this market correction has been more severe than necessary.
- Developed markets are likely to be effected by the emerging markets slowdown (particularly relating to China), but the developed markets are still supported by a number of positive factors and China still has opportunities to support their future growth.
- We do believe there may be softer returns than experienced in previous years, but we do not see this as a market breakdown, it is more a ‘bump in the road’.
If you’d like to know a little more, please click here for the Market Update as prepared by ANZ by clicking here: Market Update 2015_08 Market correction