It wasn’t the best start to the year for investors as a weakening global economy continued to take its toll on the world’s major share markets. And it was a similar story here in Australia, with both our share market and our dollar losing ground amid concerns that we’re headed for our first recession since 1991.
At a glance
Those thinking that the turning of the year would immediately bring better news now know that they will need to wait longer. January was again not a happy month for investors. The US share market had its worst beginning ever for the first 20 days. The early-month weakness was concentrated in financials rather than in cyclical stocks, suggesting that the ongoing banking sector problems were of more concern than the general economic weakness. For all of January, the S&P500 index fell by 8.6%, although it remains 9.8% above its 20 November low.
The New Year did not bring better economic news. Most sobering was the International Monetary Fund (IMF) downgrade to its 2009 global economic growth forecast. The IMF now expects global growth to be 0.5% in 2009, the slowest annual growth rate since World War II.
Global growth is slowing given the global financial crisis and falls in global output and trade. The prognosis for US, Europe and Japan was particularly sobering with developing economies set to be the main driver of growth in 2009.
Quarterly Outlook draws on the views and opinions of Australia’s leading funds management organisations, as well as the views of the Lonsec Investment Committee. Quarterly Outlook presents tactical positions (overweight, underweight and neutral) towards shares, property, fixed interest and cash, based on these combined inputs.
Results from the December quarter were an apt summary of the grim year investors had in 2008.
Over the three month period, at least 19 countries declared recession, leading to unprecedented levels of volatility in equity markets. The Australian share market recorded its fifth consecutive negative quarter.
The declining global growth led to commodities and commodity stocks being sold off heavily, thus having flow-on effect on the Australian dollar, which declined significantly.
An overview of the latest figures in the American economy provided by Chris Caton.
Click here to access this report
In a world where “saving” is a dirty word and “credit” is a match made in heaven, we are seeing some of the toughest financial times ahead of us.
I believe we have 12 to 24 months of continued credit issues and volatility in the markets ahead of us. The reason for this is the continued push to create more financial stimulus. Governments and Central Banks have gone on record to state “we will print money WITHOUT Limitation”. With this continued money printing, we continue down the same path that got us into this mess in the first place.
Congratulations, you are about to secure your FREE copy of Get Set to Invest! This book is a must for anyone considering investing. It has been written by Ryan Love, entrepreneur, highly regarded public speaker and founder of Apex Partners.
The book recites Ryan’s approach to investing in a fun, simple, easy to understand way.
This book is ideal for anyone who is new to investing or with limited investment experience.
In this book you will learn:
In a recent poll conducted by Roy Morgan Research published in the Australian Financial Review on 8 December 2008 it noted “most people who go to an adviser tied to one of the big six financial groups continue to be stuffed into the funds managed by the parent group...”
The poll found that a whopping 74% of recommendations were made to the parent group fund products!!
BT Chief Economist Chris Caton talks unemployment, interest rates and the Aussie dollar in 2009.
Click here to access this article.