This Thursday marks the end of a very volatile three months – perhaps the most turbulent since the GFC. Some of the performance figures will be literally a tale of two halves – steep early losses and big rises in the past six weeks.
The AMP’s chief economist Dr Shane Oliver believes that after strong gains from their February lows “shares are overbought and vulnerable to a pull back”.
“Beyond the near term uncertainties though, we still see shares trending higher this year helped by a combination of relatively attractive valuations compared to bonds, further global monetary easing and continuing moderate global economic growth,” he wrote at the weekend.
And economists at CommSec wrote at the weekend that “To say that global sharemarkets have had a mixed start in 2016, borders on understatement.”
“Of 73 sharemarkets monitored by CommSec, so far this year 37 of the bourses are lower with the remaining 36 markets up from the end December levels of 2015.
"Best performers are in South America with Peru up almost 23 per cent and Brazil up 18 per cent. At the other end of the scale the Chinese market is down around 15 per cent. The Australian market is in 43rd spot, down near 2 per cent.”
CommSec says that among the currencies it looks at (120 cross-rates against the US dollar), 57 are higher in 2016 so far, 30 largely unchanged and 33 currencies weaker against the greenback.
“Commodity currencies lead the gains, such as those from Canada, Norway, Australia and Brazil. The Brazilian real is up near 9 per cent with the Russian rouble up 7 per cent. The Australian dollar is the 12th strongest currency, up around 4 per cent against the greenback,” Commsec analysts said at the weekend.
Last week US shares fell 0.7%, Eurozone shares lost 1.9% and Australian shares also fell 1.9%. Japanese shares rose 1.7% and Chinese shares were up 0.8%.
The number of US oil rigs declined to the lowest level since November 2009 last week, again emphasising the sharp fall in investment by American energy companies amid the slump in oil and gas prices.
The number of US oil rigs dropped by 15 to 372, according to data from services group, Baker Hughes. That is the lowest number since the week of November 13 2009 and a long way from the 1,609 rigs in October 2014. Oil prices lost around 4% last week, Comex gold fell 2.6%, silver lost 3.9% and copper fell 2.3%.
