Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892
While the long post-global financial crisis global expansion is still intact and is providing fundamental economic support for risk assets, it is increasingly being challenged by downside risks, with trade wars and emerging-markets economies the latest worries. Risk asset classes have also become overdependent on the U.S. economy. All going well, the global and U.S. economies will continue growing through 2019, but the recent pattern of volatility looks set to become an established feature of what are now “late in the cycle” markets.
In Australia, the economic data continue to blow hot and cold, though some forecasters, notably the central bank, believe a pickup in growth is not far away. The equity market has picked up, despite the drag of the financials, suggesting that it too may be feeling a bit more positive about the outlook for profitability, although various risks (notably falling commodity and house prices) could derail the prospect of faster growth.
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