Increased Worries About Global Markets Might Weigh Over Australian Wine Markets

  • Jan 27, 2019 AEDT
  • Team Kalkine
Increased Worries About Global Markets Might Weigh Over Australian Wine Markets

As the market players would be aware, there are increased tensions related to the global economic slowdown which might weigh over the businesses of the companies. The primary factor which is impacting the global markets is the trade war between the US and China and the impact of this war over the global markets could be detrimental. The geopolitical worries have the potential to significantly disrupt the global business environment. Moreover, the consumer sentiments also get impacted. The worries about the global economic slowdown increased after Apple Inc (NASDAQ: AAPL) had lowered the expectations of the revenues. The weaker Chinese economy was a matter of concern for the businesses which are dependent on China.

Talking about Australia, it can be assumed that the wine companies which are having their operations in Australia might get impacted. The Chinese economy witnessed the negative impacts largely because of the trade wars between the US and China. After the weakness was seen in the Chinese economy, there were expectations that the Chinese officials would be announcing measures which could support the economy. The wine companies were largely dependent over the Chinese economy which could now impede the broader business environment of these companies.

The uncertain global economic environment might significantly dampen growth prospects. If we move out of the Australian and the US markets, the European markets are also very uncertain largely because of the Brexit. Moreover, in the present scenario, the companies are fearing the impact of the volatile markets over their businesses. Societe Generale had also shown concerns about its Global Markets and Investor Services Business. It stated that the revenues of this business might get impacted due to the unfavourable market environment. Thus, worries of the economic downturn could significantly derail the growth prospects of the companies. However, the concerns about the slowdown faded after the US Federal Reserve hinted that they would be flexible about the interest rate increases. This step of the Federal Reserve was very much needed as the market players were worried about the interest rates. However, the US President Donald Trump was also opposing the decision of the higher interest rates. The Federal Reserve needs to adjust the interest rates so that the inflation can be checked.

Not only wine companies, the companies which are carrying out the operations in other industries also get impacted by the unfavourable market environment. The weaker global sentiments might also impact the payment processing companies and the asset management companies. The payment processing companies get negatively impacted because the geopolitical worries impact the sentiments of the consumers which leads to lower spending from them. However, asset management companies get impacted because their business primarily depends upon the global investment environment as well as on the performance of the global equity markets. The unfavourable momentum in the global financial markets would impact the assets under management or AUM of the asset management companies. Moreover, in this sort of environment, these companies also witness lesser inflows which also impacts their business.


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