Turbulent times: drivers, opportunities and outlook
We are seeing attractive opportunities emerge amidst market volatility.
In this video, we explain the reasons for market volatility and discuss what this means for SMSF investors.
Featuring: Jeff Brunton (Investment Director), Simon Warner (Head of Global Fixed Income), Sonia Baillie (Head of Credit Research) and Shane Oliver (Head of Investment Strategy and Chief Economist)
Global macroeconomic uncertainty has been a driver of volatility
Investment markets dislike uncertainty. There are three main areas of global uncertainty which have contributed to market volatility:
- The economic rebalancing in China, away from an export-led economy to a consumption and services-led economy, has caused growth to slow
- The United States economy has been one of the strongest economies in the world, but evidence of weaker growth as emerged over recent months
- The global economy has fewer policy support options available in the face of slower growth - interest rates are already low and government debt remains high
Oil price weakness has led to wider credit market spreads
The significant fall in oil prices has negatively impacted global credit markets. There are concerns that the fall in oil prices will lead to an increase in debt defaults by energy and commodity issuers. This has seen credit spreads widen not only for the energy and commodity sectors, but across the broader credit market.
Turning down the noise and finding opportunities
It’s important to remember that markets do experience weakness and volatility through the cycle. We expect volatility is likely to remain elevated in the near term, but are seeing attractive opportunities emerge amidst this volatility.