The financial system has taken a small but noticeable exhale, most notably in the U.S. with equities and bonds rebounding from their June lows.
Some are calling this a pivot party, with the prospect of softening inflation data and, therefore, interest rate expectations placing a temporary floor under asset prices.
Bulls & Bears
Recent financial market developments have many investors understandably nervous.
Tackling price inflation through higher interest rates has become a global phenomenon. Tighter than expected financial conditions indicate a meaningful economic slowdown, and recent equity market weakness reflects this.
Cost Control & Pricing Power
Understandably, the war in Ukraine has overshadowed a strong ASX Report Period.
Analysts displayed growing optimism as Australian businesses emerged from the omicron wave better than feared. This optimism translated into upgraded FY22 earnings from 13.6% to 14.2%, led by materials and energy sectors, the beneficiaries of global inflation and geopolitical risks.
Ukraine and Russia Crisis
Below are our early observations regarding the current crisis in Ukraine.
We are monitoring the situation closely and hearing from a range of industry experts to understand the impact as it evolves.
Ultimately, short-term outcomes are difficult to predict. This reinforces the benefits of having a balanced, long-term, valuation driven approach to portfolio management.