Shares to remain volatile as trade war heats up

Shane Oliver - Investors should expect more sharemarket volatility over the next year as the trade war between the US and China ratchets up, according to AMP Capital.

 

 

In a recent blog post, the fund manager’s head of investment strategy and chief economist, Shane Oliver, said the US–China trade war had escalated again in August and new tariffs had come into force on 1 September.

“This follows the breakdown in trade talks between the two countries in May, and consequently, President Trump announced new tariffs on China in early August,” Mr Oliver said.

“More recently, the situation escalated as China retaliated, and the US then retaliated and so on.”

Mr Oliver said despite this amplification of the trade war, a deal between the two countries was likely to be reached as consumer confidence in the US economy could be affected if the situation went any further.

“The impact has not really hit consumers in the US and globally yet, as while tariff rates have gone up, they haven’t been that onerous; but if they continue, they will have more of an impact on consumers, and on products such as electronic goods coming into the US,” he said.

“There’s been a decline in business confidence and a decline in business investment, and likewise we’ve seen a decline in the Chinese economy and their exports to the US, so it is beginning to have a negative impact.”

Mr Oliver added that it would be harder to reach a deal now given trust had been broken on both sides, but that President Trump was clearly more committed to reaching one given the trade war was starting to affect the sharemarket.

“While it may be taking longer, ultimately we think a deal will be reached because President Trump wants to be re-elected next year and he may struggle to get re-elected if he lets the US economy slide into recession,” he said.

“Investors should expect more volatility and falls in sharemarkets along the way, but once a deal is reached and central banks around the world ease up on monetary policy, that should help sharemarkets on a six- to 12-month time horizon.”

 

 

Sarah Kendell
10 September 2019
smsfadviser.com

 

 

Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda has been my financial adviser for 20 years. I have always found her to be highly intelligent, knowledgeable and professional in her career. Rolanda is accessible at all times and patiently explains terms that I do not fully understand. I can highly recommend Rolanda and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda’s advice, experience and strategies and the returns on my investments. Rolanda is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda who has given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major losses, of some, during the GFC was not felt by me unduly. Rolanda and her team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia (Ausgrid))
Rolanda has been my Adviser for the past 18 years. Through her wide industry experience and professional expertise she has ensured the sound development and ongoing management of my investments. Her advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. She has a friendly, engaging manner and is always readily available to address any of my concerns. I have no hesitation in recommending her. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2021 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.