March Movements Ahead

March Movements Ahead

March Movements Ahead 626 345 AMA Team

Screen_Shot_2013_03_05_at_9.57.53_AMGood day to everyone. March is already upon us (where has this year gone already?) and with that I’m certainly looking forward to enjoying some spring weather as sports season kicks in, in Shanghai. With some interesting news in the markets this week, let me bring you up to speed on the markets!
The early part of the week was pretty volatile, just as we’d anticipated volatility to increase, and this saw the swings going down -3% all the way up 3% and finally ending the week at… just about where they started for indices around the globe! Certainly there were a multitude of factors causing this movement but some of the more influential ones were the likes of the political election hang up in Italy which put some concern ‘spotlights’ back on the Eurozone earlier in the week and watched Italian bonds rise 5% in just one day, and then go unnoticed the next.
On the other side of the Atlantic and on the topic of the ‘Sequester’ (or spending cuts), the US ended up failing to come to an agreement which means the automatic spending cuts or ‘Sequester’ as they’re calling it has come in to effect. Essentially, spending is being cut by $85 billion over the next 7 months. $85 billion you ask? Yes, I know it sounds like a big number but considering trillions have been pumped into the markets in recent years, this is considered as nothing in comparison and alas is pretty much going rather unnoticed. Although this sp
Screen_Shot_2013_03_05_at_10.01.41_AMending cut is not too significant (in the grand scheme of things), the lack of US politicians to intervene does set an unusual precedent as the US has more decisions to make with the next meeting on the topic scheduled for the end of the month. Not to mention that this is the first time in recent history they have failed to come to a resolution or agree to delay! So, it’ll be interesting to see where this takes us over the coming weeks and you’ll want to stay tuned to Money Matters for more on this as we watch this play out.
Screen_Shot_2013_03_05_at_10.12.14_AMThat tells us a little bit about the current news, but what about the fundamentals and the bigger picture? Corporate earnings have been pretty decent across the globe, US housing numbers are showing some strength but are still down a 1/3 from where the average indication should be, whilst emerging markets are showing more and more resilience through trading agreements. This was recently reflected by China and the UK entering into discussions for trading agreements between the two countries. But let’s remember the economy is still fragile and although it’s ready to move up (and should fundamentally do so), any sneezes or sniffles such as the Italian election or announcement of QE3 ending, for example, are likely to create a stir in the markets. We’ve seen a holding pattern in some commodities such as energy which after a strong run since the beginning of the year have somewhat been flat for the past few weeks so we’re now waiting for the next wave of demand to push it higher.
And so with that in mind, it’s all eyes on the economics as we have some interesting developments coming in the next few months and investors will surely want to hold a balanced portfolio.
For Austen Morris Associates’ investors – talk with your advisor about any repositioning to take advantage of markets at this time. For more updates on the world financial news please visit our Weekly Global Economic Outlook.
Co-Head of Portfolio Management,
Darren Cox
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com

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