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Market Update Regarding Recent Falls

Article By Adam Hurwood | | Financial Planning

Over the last few weeks there have been large falls in global equity markets as a result of a number of different concerns spooking shareholders.

The last two years markets have seen an exceptionally strong run of positive performance on the back of above average global growth with very little volatility in prices. It is common that after a sustained period of great returns that there is a sell-off. This is why we have our portfolio’s diversified, matched to your level of risk and time frames and not overly exposed to high risk investments. This will protect your assets throughout this volatility.

At the moment the concerns are;

  1. Rising interest rates in the US to slow US growth and impact on company profits;
  2. Tariffs and rising oil prices increasing costs, leading to higher inflation and lower company profits
  3. Instability in Europe due to Brexit negotiations and a new government in Italy putting pressure on the EU

Whilst these are significant concerns it is important to remember the positives;

  1. Rates are rising in the US due to sustained high levels of growth which is still generating strong company profits and likely to do so in the next 6-12 months
  2. The tariffs are still only a small percentage of global trade and have not impacted prices or costs significantly
  3. The EU problems are political and companies in Europe are producing solid profits on the back or a lower Euro, low interest rates and expanding US and China.

This together with improving growth in Australia, China still driving our export boom and low interest rates and currency in Australia, mean that whilst markets will be volatile there are still positives and importantly assets that are worth buying and holding now if you take a long-term view.

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