Latest news with #GeopoliticalUncertainty
ABC News
2 days ago
- Business
- ABC News
Stocks climb 'wall of worry' as ASX 200 gains 10 per cent over financial year 2025
For all the turbulence on the Australian stock market in recent months, you wouldn't have known it on June 30. "Who doesn't love the stock 'pump' on the last day of the financial year …" financial commentator Danielle Ecuyer posted on X. It was a strong session on Monday, before a late wobble saw the S&P/ASX 200 post a modest rise of a third of a per cent — cementing a 10.2 per cent gain for the financial year. Over the last five days, the local benchmark index has gained 0.4 per cent and is currently about 1.1 per cent off its 52-week high. The Australian share market performed remarkably well in financial year 2024/25 — the ASX 200 index began the financial year at 7,750 index points and closed it 8,542. "The ASX 200 has had a surprisingly good year … at a time of heightened geopolitical uncertainty," Ms Ecuyer told ABC News. The past 12 months have seen major conflicts continue, including wars between Russia and Ukraine, Israel and Hamas, and most recently Israel and Iran. The latter also saw incredible price volatility in oil markets, with the price of Brent crude surging 14 per cent at one point, only to fall back by the same amount following the declaration of a ceasefire. Any major oil price surge had the potential to spark a renewed inflation outbreak, interest rate hikes and a global recession. It would have taken nerves of steel to hold a long position in the equity markets — that is, hold onto shares rather than sell out to reduce risk — and yet, many did. Many also piled into stocks after they fell. "The mega trends of AI and data centres boosted the technology sector as one of the stand-outs," Ms Ecuyer said. The Australian share market also became known throughout financial year 2025 as something of a "safe haven" investment opportunity. Investors from the United States, in particular, piled into Australian banking stocks. "Defensive buying from US and overseas investors pushed banks and large cap stocks like Wesfarmers and CommBank to all-time highs," Ms Ecuyer said. "Gold miners shot the lights out, up over 50 per cent, while slowing China growth and [macroeconomic impact of] tariffs dragged down materials and energy stocks into negative territory." But overall? This is especially the case, Ms Ecuyer said, considering US President Donald Trump's "Liberation Day'" global markets sell-off and a domestic economic backdrop, which has not been so positive for many Australian cyclical stocks. "It has been a good year all round," Marcus Today senior portfolio manager Henry Jennings agreed. "Close to record highs despite the volatility and the uncertainty." Mr Jennings observed intense interest in a number of different stocks and something of a dislocation between the fundamental performance of companies, the economy, and the stock market. CBA shares have gained more than 46 per cent over the past 12 months. However, Mr Jennings expects the gains to be "more limited" from here for the banking giant, as money shifts out of Australian financials, which he said had been seen as "defensive" for a period, and back into US technology stocks. The Australian financials index finished up 23 per cent for the financial year. AMP's head of investment strategy Shane Oliver helps manage billions of dollars worth of superannuation funds. Rather than investors relishing in a bullish trading environment, where buying enthusiasm overwhelms the markets, investors have been climbing a so-called "wall of worry". "Trump has tried to build a new world order and upset the global trading system with big tariff hikes and … conflict in the Middle East threatened to disrupt oil supplies," Dr Oliver said. "Fortunately, Trump backed down on the worst of his tariffs for now and the Middle East threat has fizzled seeing US shares rise to a new record high. "Australian shares [closed the financial year] just 0.9 per cent below their record high and on track for another financial year of strong returns for 2024-25 helped by strong profit growth in the US and central bank rate cuts elsewhere, including in Australia." The gains could continue in the near term, with Dr Oliver noting that July is normally a strong month for shares. Every Australian with superannuation benefits from this rise in the value of share markets. Indeed, an average wage earner would have added or earned close to $20,000 on to their superannuation balance over the past 12 months, assuming they were all-in on Australian shares. The superannuation sector itself is now worth well over $4 trillion. From today, the superannuation guarantee rate will increase from 11.5 per cent to 12 per cent. But the risks to financial markets haven't evaporated — including a bond market sell-off that is showing no signs of slowing. The yield on US 30-year Treasury bonds has been trading above 4.8 per cent now for two months. Yields rise when bond prices fall. Bond prices have been falling as global investors start to question the sustainability of the US fiscal position. "A US public debt crisis is the main threat to [the bond market]," Dr Oliver said. But however the share market performs over the next 12 months, it is likely to be a bumpy ride, he said. "Share market volatility is likely to remain high in the next few months given tariff uncertainties, concerns about US debt and likely weaker growth and profits. "But with Trump likely to pivot towards more market-friendly policies and central banks, including the Federal Reserve and the RBA, likely to cut interest rates further, shares are likely to provide reasonable gains into year end." Another wild card relates to the boss of the US Federal Reserve, Jerome Powell. Donald Trump wants him removed as chair, to be replaced by someone more willing to cut interest rates. "A highly unusual move given that the Fed Chair's term does not expire until May 2026," IG market analyst Tony Sycamore wrote in a note. This has contributed to a fall in the US currency to multi-year lows, as measured by the US dollar index. "Trump's choice to replace Powell when it comes, is expected to align with his agenda of lowering interest rates," Mr Sycamore said. A loss of confidence in any global central bank, with share markets at record highs, is a rather scary thought and a recipe for further volatility heading into the new financial year.
Yahoo
7 days ago
- Business
- Yahoo
Asian stocks hesitant, dollar slides on Trump's attack on Powell
By Ankur Banerjee SINGAPORE (Reuters) -Asian stocks stuttered on Thursday, while oil prices stabilized and the euro was perched at a 3-1-2/-year high as investors weighed geopolitical, economic and fiscal uncertainties as they braced for U.S. President Donald Trump's deadline on tariffs. Markets have been soothed by a ceasefire between Israel and Iran that appeared to be holding, reducing the risks of disruptions to the global oil trade and underpinning sentiment. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trading, as the rally in Wall Street took a breather overnight.[.N] Tokyo's Nikkei rose 0.9% to a four-month high. The U.S. dollar selling kicked up a notch after a media report said Trump has toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October in a bid to undermine his position. That pushed the euro to its strongest level since November 2021. It last fetched $1.6805. The Swiss franc firmed to a decade-high while the Japanese yen strengthened 0.35% to 144.70 per dollar. Trump has repeatedly criticized Powell for not cutting interest rates and has floated the idea of firing him or naming a successor soon, denting investor confidence in U.S. assets and undermining the central bank's independence. "I think it's a given that Trump's pick to succeed Powell, when it comes, will be one that sits at the highly dovish end of the spectrum and will support Trump's agenda of lowering interest rates," said Tony Sycamore, market analyst at IG. "The issue with this is it will resurface questions from earlier in the year around the Fed's independence, which, as we saw, undermines confidence in the Fed and the USD." The dollar index, which measures the U.S. currency against six rivals, wallowed at its lowest level since March 2022. The index has slid 10% this year as investors, worried by Trump's tariffs and their on U.S. growth, look for alternatives. Financial markets remain on edge over Trump's chaotic trade policies as the clock ticks down to his July 9 deadline for trade deals. Powell, who resumed two days of congressional testimony on Wednesday, said Trump's tariff plans may well just cause a one-time jump in prices, but the risk it could fuel more persistent inflation is large enough for the central bank to be careful in considering further rate cuts. Fed officials still expect to cut interest rates this year, but the timing is uncertain as officials wait on looming trade deadlines and for more certainty about the scope of the tariffs that will be imposed and the ways that rising import levies influence prices and economic growth. "No one knows exactly how tariffs will impact inflation, which will keep central banks in conservative mode, particularly the Fed," said Bank of America strategists, noting downside risks to global growth remain relevant, not only due to trade wars but also due to geopolitical developments. "We are carefully monitoring fiscal policy across key countries that can affect global interest rates. Unsustainable fiscal dynamics can trigger an accident in bond markets," they said in a note. In commodities, oil prices inched higher to continue recovering after a volatile month so far due to the conflict between longtime rivals Israel and Iran. Brent crude futures rose 0.2% to $67.82 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 0.28% to $65.1. [O/R] Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
7 days ago
- Business
- Reuters
Asian stocks hesitant, dollar slides on Trump's attack on Powell
SINGAPORE, June 26 (Reuters) - Asian stocks stuttered on Thursday, while oil prices stabilized and the euro was perched at a 3-1-2/-year high as investors weighed geopolitical, economic and fiscal uncertainties as they braced for U.S. President Donald Trump's deadline on tariffs. Markets have been soothed by a ceasefire between Israel and Iran that appeared to be holding, reducing the risks of disruptions to the global oil trade and underpinning sentiment. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was little changed in early trading, as the rally in Wall Street took a breather overnight. Tokyo's Nikkei (.N225), opens new tab rose 0.9% to a four-month high. The U.S. dollar selling kicked up a notch after a media report said Trump has toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October in a bid to undermine his position. That pushed the euro to its strongest level since November 2021. It last fetched $1.6805. The Swiss franc firmed to a decade-high while the Japanese yen strengthened 0.35% to 144.70 per dollar. Trump has repeatedly criticized Powell for not cutting interest rates and has floated the idea of firing him or naming a successor soon, denting investor confidence in U.S. assets and undermining the central bank's independence. "I think it's a given that Trump's pick to succeed Powell, when it comes, will be one that sits at the highly dovish end of the spectrum and will support Trump's agenda of lowering interest rates," said Tony Sycamore, market analyst at IG. "The issue with this is it will resurface questions from earlier in the year around the Fed's independence, which, as we saw, undermines confidence in the Fed and the USD." The dollar index , which measures the U.S. currency against six rivals, wallowed at its lowest level since March 2022. The index has slid 10% this year as investors, worried by Trump's tariffs and their on U.S. growth, look for alternatives. Financial markets remain on edge over Trump's chaotic trade policies as the clock ticks down to his July 9 deadline for trade deals. Powell, who resumed two days of congressional testimony on Wednesday, said Trump's tariff plans may well just cause a one-time jump in prices, but the risk it could fuel more persistent inflation is large enough for the central bank to be careful in considering further rate cuts. Fed officials still expect to cut interest rates this year, but the timing is uncertain as officials wait on looming trade deadlines and for more certainty about the scope of the tariffs that will be imposed and the ways that rising import levies influence prices and economic growth. "No one knows exactly how tariffs will impact inflation, which will keep central banks in conservative mode, particularly the Fed," said Bank of America strategists, noting downside risks to global growth remain relevant, not only due to trade wars but also due to geopolitical developments. "We are carefully monitoring fiscal policy across key countries that can affect global interest rates. Unsustainable fiscal dynamics can trigger an accident in bond markets," they said in a note. In commodities, oil prices inched higher to continue recovering after a volatile month so far due to the conflict between longtime rivals Israel and Iran. Brent crude futures rose 0.2% to $67.82 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 0.28% to $65.1.
