Week Started Off on A Bad Note: How Long Will This Continue?
After the long holiday, the Chinese market came out on Monday and they tried to react to all the news which they missed in the previous week. The major concern which has been impacting the global markets is the higher rates prevailing on the debt products. Probably that’s the reason that even the US market capped the gaining momentum. The Dow Jones Industrial Average ended October 8 on a positive note at 26,486.78 implying an increase of 39.73 points or 0.15%. However, the broader markets ended the day lower primarily because of the rising rates which seems to weigh on the investors’ sentiments.
The increased government bond yields have been prompting investors to deploy the investable capital into the risk-free assets rather than increasing their exposure towards equities which are considered riskier than debt products. The strong momentum in the government yields leads to higher costs for the companies as well as investors. This has also led to the reassessment in regard to the equity valuations. Therefore, further outflows from the equities might be witnessed primarily because the investors might consider reshuffling of their portfolios.
Analyzing the Performance of Australian Market
The Australian market continued to fall today, as expected, thus continuing the losing streak for the second day of the week. S&P/ASX200 ended the day at 6041.1 which represents a fall of 59.2 points or 1.0%. The Australian market has been facing the global pressure and they are reacting in line with the global markets. The investors are losing their trust in the equity markets as the higher rates in the fixed income markets continue to be one of the favorite spaces for the Australians.
Apart from the elevated government yields, the Australian stocks seem to be impacted by the trade dispute between the US and China as well as favorable momentum in the Chinese economy. These factors have raised concerns regarding the fundamentals of the Australian economy. On October 9, 2018, NEXTDC Limited (ASX: NXT) and Mineral Resources Limited (ASX: MIN) ended the day on the positive note as they have advanced 2.61% and 1.551%, respectively. On the other hand, Bellamy’s Australia Limited (ASX: BAL) and Resolute Mining Limited (ASX: RSG) ended the day by declining 6.25% and 5.66%, respectively.
However, Monash IVF (ASX: MVF) also witnessed a strong downtrend on October 9, 2018. The company has made an announcement regarding the resignation of the chief executive officer or CEO and managing director with the immediate effect. As per the company’s statement, the chief executive has stepped down because of the personal reasons. He was also not able to plan a shift to Monash IVF Group in Melbourne. The stock declined 9.174% at the time of writing.
A View on What’s Happening in Chinese Market
The policy makers in China made an announcement that the Reserve Requirement Ratio has been lowered. As a result of this, the major banks have been allowed to keep the reserve capital lower than they were keeping. This step by the central bank of China reflects that they are trying to improve the credit creation. The views on China are optimistic lately. The economy’s growth is expected to remain at approximately 6.5%. Other factors which have been supporting the Chinese economy include: stable prices as well as strong employment data.
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.
Click here to get your free report.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.