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Santa clause rally short lived
The Santa clause effect was evident again this year with the Australian share market rising for 9 days consecutively, and by approx. 7% in the final two weeks of the year.
This however has been short lived with the Australian share market falling 5.8% last week and nearly 8% in the last 2 weeks, taking the All Ordinaries Index below the 5,000 point level, as the collapse of Chinese stock markets dragged global equities down.
2016 has started with heightened concerns over the Chinese growth story with the People’s Bank of China cutting the yuan’s reference rate for the 8th straight day adding further volatility to its currency.
This is contrary to other economic data around the world. In the US, the pace of job growth remains very strong and with that, the unemployment rate is low. In the Eurozone, business sentiment indicators and the labour market are improving.
The RBA, in our view, will keep interest rates on hold leading up to the May Budget which will be framed around election economics and ways to stimulate the economy.
Snapshot for 2015 - key performance indicators
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31 / 12 / 2015
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31 / 12 / 2014
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Change
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Cash rate
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2.00%
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2.50%
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-20.0%
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10 Year Government bond yield
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2.82%
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2.77%
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1.81%
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All Ordinaries index (Aust share market)
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5,366.4
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5,388.60
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-0.41%
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Dow Jones index (US share market)
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17,425
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17,841
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-2.23%
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AUD vs USD
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0.7281
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0.8321
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-10.9%
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Iron ore price (USD/tonne)
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42.50
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71.20
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-40.3%
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Oil (USD/tonne)
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36.60
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53.27
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-31.3%
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While 2015 has been a somber year in terms of investment returns, the last 3 years have been above expectations. Keeping a medium to long term perspective is important when thinking about achieving your goals.
Christmas debt hangover
Australian families racked up an eye watering $27.5 billion in credit card debt over the Christmas period.
As a result they are expected to fork out an extra $286 million in interest payments, according to credit card comparison site creditcardfinder.com.au's analysis of Reserve Bank data. Creditcardfinder believes that more than one in three Australians are not expected to pay off their Christmas debt on time with the average consumer most likely to take up to five months to do so.
Credit cards can revert to much higher interest rates if you don't pay them off within the required time frames.
Kind regards,
The Coastline Private Wealth team.
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