Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892
Cash and bond yields have dropped to new lows as central banks have sought to boost growth and inflation and as investors have sought safe assets like government bonds in a climate of high political risk from the US-China trade tensions. Lower yields have boosted the valuation attractiveness of equities, and income-oriented sectors like property and infrastructure have been in particularly high demand. Looking forward, the most recent analyses suggest the world economy can keep the current business expansion going into 2020, but against a background of sizeable downside risks, notably from the trade conflicts.
In Australia, the economy continues to be patchy and increased corporate profits have been hard to come by. The profit outlook for 2020 looks somewhat better, and (providing international disruptions don’t intrude) local equities may continue to be supported both by profit growth and further relative valuation support from further falls in interest rates.
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