After an April sell-off saw the US market fall 5.5% from its all time, the S&P 500 rebounded 2.7% last week, its best performance in almost six months. This came despite another hotter than expected inflation report, with the headline PCE (the Fed's preferred inflation gauge) increasing at an annual rate of 2.7%. Solid earnings releases drove the gains, and with 46% of the market having reported 80% of companies have beaten expectations. Most other sharemarkets followed suit, with the FTSE 1...
Apr 27, 2024•23 min
Markets were volatile last week, with another stronger than expected inflation report in the US rattling investors and pushing out hope for interest rate cuts. Wednesday's release of our own consumer price index for the March 2024 quarter will be the key event here in New Zealand, with markets hopeful this will be fall further and open the door to Official Cash Rate cuts later in the year. Elsewhere, Federal Reserve speakers will be closely watched to see recent developments have changed their v...
Apr 13, 2024•22 min
Several sharemarkets hit new highs during the first few months of this year, but the most significant milestone of all came in Japan, where the Nikkei 225 index finally retook the level it reached 34 years ago in 1989. After a stellar performance in 2023 which saw the Nikkei surge 28.2 per cent, even outpacing the mighty S&P 500, Japanese shares rose another 20.6 per cent in the first three months of this year and stormed through those previous highs. The rally hasn’t been because of a weake...
Apr 09, 2024•12 min
The highlight of the coming week will be the consumer price index report in the US, after two months of stronger-than-expected figures. The odds of a June rate cut from the Fed have fallen from almost 90% to about 50/50 in recent weeks. The European Central Bank will release a monetary policy decision on Thursday and while no change is expected, markets will be looking for clues that a rate cut is imminent. In contrast to the US, recent inflation readings in Europe have come in below forecasts. ...
Apr 06, 2024•19 min
This year has started very strongly for share investors, with returns in the March quarter much better than many would’ve expected. World shares rose 7.8 per cent and as was the case in 2023, the US and Japan led the charge. New Zealand assets lagged, with the NZX 50 sharemarket index rising 2.8 per cent and corporate bonds posting a marginal gain. As was the case in 2023, well-diversified investors with a global mindset have been handsomely rewarded. Central banks will remain a focal point in t...
Apr 03, 2024•19 min
It'll be another holiday-shortened week, with markets closed on Monday in New Zealand, Australia and the UK (while the US market will open as normal on Monday). The highlight will be the March jobs report in the US, while the latest ISM indices are also due (on Monday and Wednesday). If the flash PMIs for the same period are anything to go by, we might see an improvement across the manufacturing sector this month. Federal Reserve Chair Jerome Powell will be giving a speech at Stanford on Wednesd...
Mar 30, 2024•17 min
If you hold some of your investments in a trust, your tax rate is going up next week. You might need to rethink the types of assets you own and the investment vehicles you choose, to ensure you’re not paying more tax than you need to. But beware, the impost might not be the showstopper some are suggesting it will be, and it doesn’t always make sense to build an investment strategy around tax minimisation. Fine-tuning could be the order of the day, rather than a dramatic recalibration of your app...
Mar 26, 2024•13 min
It was a very strong week for sharemarkets in most regions, with confidence interest rate cuts are just around the corner growing and financial markets responding positively. The Swiss National Bank cut its policy interest rate on Thursday, becoming the first central bank with a G10 currency to do so. This followed the Federal Reserve's unchanged guidance for three rate cuts in 2024 (despite some stronger inflation figures of late), and the first Bank of England decision since 2021 where no memb...
Mar 23, 2024•20 min
Short-term deposits are offering great value to investors right now, but don’t get content. Within the next six months interest rates could start falling, and after the first cut they’re likely to keep going lower. If that happens, investors will be facing much less attractive reinvestment rates and a declining income stream. Rather than waiting for the herd to catch on, savvy investors should take advantage of this opportunity and make hay while the sun is still shining.
Mar 19, 2024•6 min
Central banks will be in the spotlight this week, with monetary policy decisions due in Japan and Australia on Tuesday, then in the US and UK on Wednesday and Thursday respectively. All eyes will be on the Fed following last week's hotter than expected inflation figures, with investors likely to focus on the latest projections and the dot plot, which will show where Fed officials see interest rates going over the coming years. The Bank of Japan (BOJ) decision on Tuesday will also be eagerly anti...
Mar 16, 2024•17 min
Property investors are set to benefit from changes to interest deductibility rules, which will kick in at the end of this month. The Government is reversing changes that were implemented under the previous regime, which meant interest costs could no longer be considered an expense come tax return time. What might that mean for prospective investors, and with less headwinds will the housing market take off again?
Mar 12, 2024•22 min
The highlight of the coming week will be the US consumer price index on Tuesday. After a hotter than expected release in January, markets will be watching for any further upside surprises or signs price pressures are more persistent than hoped. This will be the last major release ahead of next week's Fed meeting, as markets get increasingly confident the first rate cut of this cycle will come within the next three months. Locally, we'll be watching the ANZ truckometer and electronic card transac...
Mar 10, 2024•18 min
The local reporting season wrapped up last week and while it wasn’t terrible, we saw a lacklustre set of releases and company updates. Many of our listed companies are still doing it tough against the backdrop of a sluggish economy, high interest rates and waning consumer demand. Which companies fared worst and why, were there any brights spot, and what does this tell about the economy and the investment outlook?
Mar 05, 2024•16 min
Last week was another good one for global sharemarkets, with further highs for indices in the US and Japan, and solid performances elsewhere too. The key event was the Reserve Bank decision here in New Zealand, where the Official Cash Rate was left unchanged and forecasts suggested the next move will be down. Looking ahead, the key economic release will be the US monthly jobs report on Friday, which is the last ahead of the March Federal Reserve meeting. Speaking of the Fed, Chair Jerome Powell ...
Mar 03, 2024•24 min
As we look ahead to the US presidential election in November, many will be pondering how this might influence the investment outlook. The election is eight months away, but March is an important month on the US political calendar. Next week Super Tuesday should tell us what we already know - that we’re headed for a Biden vs Trump contest, the first since presidential rematch 1956. Two days after that, President Biden will give his State of the Union address. What does history tell us about how t...
Feb 27, 2024•14 min
The S&P 500 in the US rose 1.7% last week, closing at a new record high partly on the back of another very strong result from NVIDIA. The chipmaker and key AI exposure rose another 8.5% last week, which sees it up 59.2% so far this year (following a 238.9% gain in 2023). European and Japanese shares were also strong, both rising 1.4% as indices in both regions hit fresh peaks. The Nikkei 225 in Japan finally surpassed it’s 1989 highs after 34 years, while the European Stoxx 600 exceeded its ...
Feb 24, 2024•27 min
Some investors baulk when they see a high share price, but they shouldn’t. A company’s share price tells us absolutely nothing about whether it’s expensive or cheap and if anything, it can often be a sign of a strong track record. Don’t be put off by high share prices, or the illusion of value that can come from a low price. Dig a little deeper and consider each investment on its merits. Some of the best opportunities are the ones that might look the most expensive (on the face of it).
Feb 20, 2024•15 min
Monetary policy will remain in focus this week, with the minutes of the last Federal Reserve meeting due for release as well as the ECB's account of its January meeting. Flash PMIs are out on Thursday in most of the major economies, and these will provide useful insights into how economic activity is tracking this year. Locally, retail sales will be a highlight on Friday, while we'll see the results of the latest dairy auction midweek. The earnings season gets going on the NZX this week, with a ...
Feb 19, 2024•20 min
What a week! We saw the S&P 500 sharemarket index in the US rise another 1.4%, closing at a fresh record high and pushing through 5000 points for the first time. There was also plenty of action in New Zealand, as wholesale interest rates rose to a three-month high on the back of strong economic indicators and a bold OCR call from the ANZ economics team. The Reserve Bank will be in focus this week, while the international reporting season continues and some local companies will get in on the ...
Feb 19, 2024•29 min
The US market has had a stunning run over the past year or so. The S&P 500 index peaked in January 2022, before declining 25.4 per cent over the following nine months in the wake of rapidly increasing interest rates. Since those October 2022 lows, the market has rebounded 40.5 per cent. In recent weeks it’s surpassed the peak from two years ago, moving past 5000 points for the first time. Against that backdrop, is it too late to invest in US stocks?
Feb 13, 2024•14 min
Bitcoin took a big step forward last month, with the Securities and Exchange Commission in the US finally giving approval for exchange traded funds to begin trading on the sharemarket. BlackRock’s iShares Bitcoin Trust (IBIT) quickly emerged as one of the favourites, passing US$1 billion in investor inflows within just five days. This trend could well continue, and there could be a large pool of new money that’ll flow into these funds. For some looking to dip their toes into the world of crypto ...
Feb 06, 2024•15 min
The S&P 500 in the US rose another 1.4% last week, closing at fresh highs on the back of impressive earnings releases (including a very strong one from Meta) and robust economic indicators. The US market has started the new year where it left off in 2023, having gained 4.0% barely a month into 2024. Other sharemarkets performed well, with the Australian ASX 200 posting a very strong gain of 1.9% and also finishing last week at a new record high, while the local market was solid with the NZX ...
Feb 03, 2024•23 min
It’s starting to look like the US Federal Reserve might’ve done the impossible (or at least the very rare) and achieved a soft landing. If that’s the case, there’s no need for these high interest rates to overstay their welcome and cause an unnecessary recession. For investors, this would make for a much more attractive backdrop. It could mean markets perform better than many expect from here, and that the long-awaited collapse in prices some have been calling for might not come. If that’s the c...
Jan 30, 2024•11 min
Last week was a very good one for world sharemarkets. The S&P 500 in the US posted a 1.1% gain, having hit a new record high this month as inflation and economic indicators added to confidence a soft landing can be achieved. European shares surged 3.2% last week, the UK market rose 2.3%, and the Australian ASX 200 posted a 1.8% gain. The local market also had its best week since early November, with the NZX 50 gaining 1.8%. Looking ahead, this coming week is shaping up as a very busy one. In...
Jan 27, 2024•19 min
Short-term deposits are offering great value right now, but don’t get too content. Within six months interest rates could be headed lower, and after the first cut they’re likely to keep falling. If that happens, investors will be facing much less attractive reinvestment rates and a rapidly declining income stream. By the second half of this year, money could be moving back toward other assets amidst falling deposit rates. Rather than waiting for the herd to catch on, savvy investors might want t...
Jan 24, 2024•16 min
Should I pay off the mortgage faster, or use that extra cash to invest? This is a very common question, but it’s especially relevant today. Mortgage rates are at 15-year highs, with borrowing costs at levels many homeowners won’t have experienced before. Paying down the mortgage as quickly as you can is sensible, and it’ll set you on the path to financial freedom. However, it’s not black or white and using some of that spare money to invest along the way will also pay off.
Jan 13, 2024•11 min
Welcome back to On Point in 2024. In our first new episode of the year, we'll ponder some of the key questions investors are asking themselves at the moment. Will interest rates finally start to fall, can the housing market rebound continue, and how will sharemarkets both here and offshore perform in 2024? Let's discuss and debate some of the potential answers.
Jan 07, 2024•19 min
If you’re lucky enough to have a bit of surplus cash at the moment, it’s a difficult time to think about putting it to work. You want your hard-earned capital to work productively, but it’s scary to think about venturing into financial markets (or any asset class, for that matter) with your savings. Jumping in boots and all could be unwise, while sitting back and waiting for perfect conditions to emerge can also backfire. In this popular episode from 2023, we discussed some of these challenges a...
Jan 04, 2024•15 min
This was a popular episode from 2023, and its messages are still very relevant for newer investors, as well as those with more experience. Take a listen if you missed it the first time around, or simply remind yourself of these timeless investing concepts! One of our least favourite sharemarket analogies is when it’s said to be just like a casino. While some traders might treat their portfolio like a sports betting account, for genuine investors this comparison couldn’t be further from the truth...
Jan 01, 2024•10 min
2023 is done and dusted, and while it was challenging at times, as well as eventful, it ultimately proved to be a very lucrative year for investors. Some of the key stories included faster than expected declines in inflation, an interest rate rollercoaster, and the emergence of AI as a prevalent market theme. Join us to reflect on all of this and more in this episode that details asset class returns and recaps some of the biggest market events of the last year.
Dec 30, 2023•17 min
