Market Wrap-up
Click here to read this detailed update from Matrix
We are experiencing interesting times in the global share markets and we want to keep you up to date. We will provide information for you via emails and on our web site, but don’t hesitate to call if you want to speak to one of our team personally. Here’s a brief summary of what’s been happening.
Market Action
A gloomy global economic outlook sent investors on a mass exodus out of risky markets last Thursday and into the refuge of US government debt, sending yields to yet another round of new 2011 lows. The intense flight into safe-haven Treasury forced benchmark 10-year yields down more than 50 basis points since last Friday; there hasn't been such a large one-week drop in yields since November and December of 2008, when Lehman Brothers collapsed, sparking a financial-market frenzy. This morning, the 10-year US Treasury note yields 2.40%.
Investors across the globe have been buffeted by economic and political turmoil in recent days. In the US, fears have turned from worries about a possible default by the US government to a weakening economic outlook. A string of recent weaker than expected economic data have pointed to a possible slowing of the recovery. Please remember that:
When every asset class falls it signifies panic, not logic. Is panicked behaviour consistent with investment behaviour? No!
The breaking of short term technical levels, automated trading systems and the imposition of automated sell trade curbs in the US, fed the worries of traders. Automated trading systems driven by computers do not use common sense to make decisions.
Keeping market moves in perspective
Despite the past week’s extreme movements, there was nothing in terms of a fundamental change in the world economy that happened in the past 24 hours. The fact is we remain in a volatile market environment, set against the backdrop of a grinding global recovery.
Key Message
Whenever there are large market-driven movements like late last week, it is likely there will be continued volatility until things settle down again.
The key for investors is not to panic. We remain confident that while market conditions will continue to be volatile over the rest of the year, now is not the time to make knee-jerk reactions and run to cash (as many did in the depths of the GFC – with terrible results in the ensuing recovery).
Keep your head, stick to your long term strategic plan, and look through the current noise to keep headlines in perspective (especially against the backdrop of market valuations and economic fundamentals). There is nothing in the past week or so that should change your medium to long term investment strategy.
Volatility of this nature has us all concerned and we will remain in regular contact with Matrix and our research committee over the days and weeks ahead. We will take all necessary steps to keep you appraised of any new developments and ask that you contact us with any specific concerns.
Kind regards,
From The Team from Hunter Financial Planning
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