Well, I’ve picked a tricky week to be writing the Newsletter….. It has been a rough couple of days and a pretty bad month for financial markets all around the globe.Read more…….. When you mix weak Chinese growth and manufacturing data and their crazy share market antics with market jitters over the US Fed’s next move with interest rates, and layer it all on top of an already-skittish global frame of mind we end up with what AMP’s Shane Oliver refers to in Monday’s Financial Review as the perfect storm.
The result is some pretty spectacular stock market movements. Compare these: just about a month ago, we were in Week Three of July and our local Aussie share index had returned 3.1% for the calendar year so far, and the US S&P 500 had returned 2.4%. London’s FTSE was +2.9% for 2015, and Germany’s DAX was a sweet 17.5% which, in reality, was a high number that was always going to come back to the pack at some stage.
As of 24th August, ours is down 10.6% for the month of August and 6.5% for 2015 to date, while the others read similarly:
S&P500: down 6.1% for August and 4.3% for 2015
FTSE: down 7.5% and 5.5%
DAX: down 11.5% for August but still clinging to a gain of 3.7% for 2015.
But still, Craig James from CommSec notes in Monday’s Financial Review that “rather than a wave of panic, the markets were recording orderly declines from unsustainable highs.” He also noted that “this has happened in the past: between July and October last year when the market fell by about 10% but then within four months we have markets up at the highs again.”
And just in the nick of time, an email from Perpetual’s chief analyst Matt Sherwood hit the Inbox. His very timely commentary appears just a little later in this Newsletter.
A visit back to our old favourite the Volatility (VIX) Index shows quite clearly how investor anxiety has jumped back up in recent weeks where we are seeing the highest measures of volatility since mid-2012. It is still interesting to look back and see that the current palpitations are dwarfed by the worst weeks of the GFC in 2008.
Sources: ASX, Morningstar Research, CommSec.