ep 384 | The week ahead - Earnings roll on as markets endure massive volatility
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What is the main topic discussed in this episode?
On Point with Craig's Investment Partners. The information provided here is general in nature and it's not financial advice. It doesn't take into account your situation, objectives, goals or risk tolerance. All investments are subject to risks and none are guaranteed. Before you make any investment decisions, we recommend you contact an investment advisor. For more information about our services or to view the Craig's Investment Partners Financial Advice Provider Disclosure Statement, please visit our website which is craigsip.com. Welcome to On Point. I'm Mark Lister, Investment Director at Craig's Investment Partners, and I'll be talking about a range of topics including economics, portfolio strategy, investor education, and anything else that's happening out there in financial markets.
Hey team, hope everyone is well. Let's take a look back at last week's moves, then let's turn our attention to what's coming up in the week ahead. So we will start with global share markets. And in the United States, the S&P 500 index added 1% last week. The UK market was up 1.2%. Europe was up 0.6%. Japan slipped a little bit. It was down 0.2%, while emerging market equities rallied 2.3%. Across the Tasman and Australia, the Aussie market had a good week. The ASX 200 was up 2.3%, and here in New Zealand, the local NZX 50 index did slip a little bit. We were down 0.5%, but we still managed to eke out a 0.6% gain for the month of July, and that was our third consecutive monthly rise. Now, when you look at those returns, it does sort of paint a picture of a relatively stable, benign market, but that was not the case at all.
We saw some massive swings in global semiconductor stocks and indices like the KOSPI index in South Korea. We saw some very big share price reactions to some earnings releases. Meta was down, Microsoft was up. Amazon was up, Apple was down, some big swings there too, and also currency markets, quite a bit of action there, speculation that the Japanese authorities were propping up the yen, so there was lots going on under the surface. In terms of interest rates, the US 10-year Treasury yield little changed over the week, actually finished at just over 4.6%. Here in New Zealand, the five-year swap rate slipped 13 basis points and finished just above 4%. In terms of the OCR, looking ahead, markets still see an OCR hike in September as pretty much a done deal.
And when you look out to the middle of next year, financial markets see the policy rate reaching 3.5%. Today we're at 2.5%, so markets see up another 1% over the next 12 months, and that would probably be the peak, I would guess, in the eyes than most people. Oil prices came off the boil a little bit. US crude started the week at about $89. I think it was finished the week at about $84, $85. So down about $5, but still much higher than we saw through that period where we were hopeful that the ceasefire would be sustained and that we would be back to something that looks a little bit more normal. Prices came down into the 70s, still very much in the mid to high 80s. Right, running through some of last week's key releases, and there was a lot going on.
It was a big week for central banks. We saw the Federal Reserve meet. It left rates unchanged, but three members still voted to hike. So the upper bound of the Fed funds rate, no change at 3.75%, but when you look at the vote, it was 9 to 3. So nine members said hold. three said we should actually hike. This was the fifth meeting in a row where the Fed has left rates unchanged and the accompanying statement was essentially the same as last month. This was Kevin Walsh's second meeting. Definitely growing conviction amongst some Fed policymakers that higher rates are needed to keep a lid on prices. The Fed next meets in mid-September. We'll see what happens there right now. Markets see a better than even chance of a hike at that point.
but it probably all depends what happens with the us and iran and the oil price because that is going to have a very big impact on where inflation goes from here wash didn't do a great job at the press conference that was the other thing that was interesting about this meeting
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:51
2
How did global share markets perform last week and which regions stood out?
4:51–8:41
3
What hidden volatility drove big swings in tech and currency markets despite flat averages?
8:41–11:17
4
What were the recent moves in interest rates and market expectations for the OCR and US yields?
11:17–15:40
Speakers
1 identifiedMore from On Point
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ep 396 | The week ahead - Have oil and inflation forced the Fed's hand?
ep 395 | The week ahead - The report that could determine the Fed's next move
ep 394 | Value, growth, or a bit of both?
ep 393 | The week ahead - Another OCR hike on the cards?