Market Update 15th August 2019
Volatility continued overnight in financial markets, with the Dow Jones Industrial Average falling by 800 points or 3.01% and a bond yield inversion, which saw the two year Treasury rate yield trade above the 10 year rate. Australian share markets have followed suit today with the ASX 200 Index currently down 143 points or 2.15%.
The continued trade tension between the US and China is likely to keep markets volatile at least in the short term, and the modest contraction in Germany’s growth last quarter, has also fueled speculators to take a negative short term position overnight, although it’s important to keep some perspective on what is currently taking place.
Firstly, it was only recently on July 30 that the ASX 200 hit a record high of 6,875. Since then our market has fallen by 5.7% however we are still up 14.7% from the beginning of the calendar year.
Secondly Global Markets have recently reached all-time highs, so it is not surprising that there is a pullback, however the biggest economy in the world, namely the US is still making modest real GDP growth, despite some headwinds.
Lastly it’s important to remember that investing should be treated as a marathon rather than a sprint. It is very difficult to predict market highs and lows, which is why I would like to take this opportunity to remind clients with a long term perspective to remain invested, which entails riding out market pullbacks, which are a normal part of every sharemarket cycle, just as the less publicized market rallies form part of the cycle, but are often not front page news.
Kind Regards
Dominic Alafaci
Collins House Private Wealth Pty Ltd AFSL 449146
Independent Financial & Investment Advice
Collins House Pty Ltd, ACN 109 236 722, ABN 62 091 913 093 trading as Collins House Accountants
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