Investors
P: 1800 658 404
View full details
Financial advisers
Contact your state account manager or our client services.
View full details
Shopping Centres
For leasing, casual leasing and brand solutions enquiries
Contact Us
Connect with us to stay up to date with news and updates.

LinkedIn

Outlook for the New Year


Expect volatility to remain high into the New Year

 

The New Year is expected to bring more of the same in terms of constrained but gradual growth in Australia and globally. This is because conditions for a downturn or conversely, for a surge in growth, aren’t in place. In this video, Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital, provides an outlook for the year ahead.

Asset class views

 

Short term
(next few months)

Medium term
(next 1-3 years)

Global equities Expect volatility to remain high into the US Federal Reserve’s December meeting, followed by seasonal strength. The cyclical bull market likely has further to go due to attractive valuations against bonds, ‘not too hot/not too cold’ global growth, a lack of investor euphoria and easy monetary conditions but we remain vigilant to any deterioration in fundamentals.
Australian equities Expect volatility to remain high into the US Federal Reserve’s December meeting, followed by seasonal strength. A continuing cyclical bull market globally and low interest rates, the boost to profits from a lower Australian dollar and a gradual rebalancing in economic growth will help drive the market higher. However, the end of the commodity super cycle likely means Australian shares will remain relative underperformers globally.
Government bonds We expect bond yields to gradually rise as the US economy continues to grow and the US Federal Reserve moves to gradually raise interest rates. Valuations remain stretched. Low starting point yields mean low expected medium-term returns. However, bonds retain their diversification value.
Corporate bonds Credit spreads have widened with growth worries and concerns about energy companies. This looks overdone. Credit valuations are around neutral, but are reliant on low bond yields.
Property & Infrastructure Property and infrastructure assets are likely to see ongoing support from the search for yield. Higher-yield assets should do well over the medium term helped by low bond yields. The main threat would be a sharper-than-expected back-up in bond yields.
Commodities Commodities have become oversold and could bounce higher in the months ahead. While the secular forces of rising commodity supply are a negative, there is potential for a cyclical rally as the global economic expansion continues and valuations are now attractive for many commodities.
Currencies The US dollar could well peak around the time of the potential first US Federal Reserve rate hike in December as the markets ‘buys the rumour and sells the news’. The Australian dollar is likely to continue to trend down to $US0.60 or lower due to poor fundamentals.
About the author
Head of Investment Strategy and Economics and Chief Economist at AMP Capital, Shane is responsible for AMP Capital's diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.
Taking your SMSF to the next level
Download now

Sign up to our newsletter!

Receive regular insights and marketing communications including a weekly update of tending news and market insights that are tailored for SMSF trustees and investors.
Sign me up
AMP's Australian operations are bound by the current Australian privacy legislation which outlines how organisations should manage and use personal information collected and held about their customers. AMP Privacy Policy

Thanks for subscribing

Thank you for subscribing to our weekly highlights newsletter.
Your privacy is important to AMP Capital and we are bound by the current Australian privacy legislation. View our privacy policy
Submit and close

Sign up to our newsletter!

Receive regular insights and marketing communications including a weekly update of tending news and market insights that are tailored for SMSF trustees and investors.
AMP's Australian operations are bound by the current Australian privacy legislation which outlines how organisations should manage and use personal information collected and held about their customers. AMP Privacy Policy
Sign me up Not right now. Thanks

Sign up to our newsletter!

Receive regular insights and marketing communications including a weekly update of tending news and market insights that are tailored for SMSF trustees and investors.
AMP's Australian operations are bound by the current Australian privacy legislation which outlines how organisations should manage and use personal information collected and held about their customers. AMP Privacy Policy
Sign me up