Listen to our Portfolio Managers Fund and Market Updates. Our investment team discusses what happened in the market, the impact on our funds, and stock stories for last month in the videos.
Single Sector Funds:
Most markets were down in August as the trifecta of hawkish comments from Central Banks, mounting concerns about Chinese property markets and a mixed reporting season impacted sentiment. Asian markets for the most part underperformed their US and European counterparts with the Hang Seng -8.2% compared to the S&P500 and Nasdaq -2.2% and -1.8% respectively, the FTSE100 -2.5% and DJ Euro Stoxx 50 Index -3.8%.
There were few surprises from Central Banks in the month. Most Central Bankers were at Jackson Hole for the annual symposium, so it was little surprise that Jerome Powell once again set a hawkish tone, saying that inflation remains too high, and he was prepared to raise rates further if required. It was therefore interesting that US JOLTS (jobs) and inflation data released after the symposium implied the US economy was slowing in a good way.
Chinese property developers were the focus again as Evergrande’s shares traded for the first time in 17 months and promptly fell 79%. But arguably it was the news that another Chinese property developer Country Garden had missed debt payments which weighed on market sentiment. This is not a new issue and companies accounting for an estimated 40% of Chinese home sales have defaulted since mid-2021 (Reuters), but this compounded concerns that all is not well in China. The positive spin is that markets expect the Chinese Government to provide further support to the property market and stimulus to the economy which should benefit the resources sector.
We discuss ANZ reporting in more detail below, but global themes were similar with rising costs (interest, labour and capital expenditure)
and cautious outlooks meaning that markets reacted negatively to anything less than beats across the board. There was a more defensive
bias to markets globally in August with the Energy, Healthcare and Communications sectors the stronger relative performers and
Financials, Materials and Utilities the laggards.
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