Putting aside the Greek headlines this week, the main point of interest was the US Federal Reserve meeting. The Fed gave a slightly more dovish tone to likely interest rate hikes, lowering expectations for future hikes and largely confirming the markets view for the first rate rise to be in September 2015.
We should fully expect US interest rates to be rising in the coming 12 months, and it is something new for the market to adjust to, however growth in the US has been sound and should not be too severely impacted by the rises.
Equally, the likelihood of major increases at this juncture still looks quite remote. Feel free to call me to discuss this issue as it is quite technical, but pertinent for any of closely watching US interest rate rises.
China saw some long overdue selling, and is now down some 10% from its highs. This shouldn’t surprise us given the stellar rises seen in the Shanghai Composite this past 12 months – the market was up 150% at its highs, and trading 100x the average daily volume seen on the ASX most days.
We will be looking a lot closer at international markets in the weeks and months to come, as we feel the US and Asia in particular offer Australian investors a ‘growth’ angle that is harder to find locally here in Australia.
Like with all of our recommendations, we want to time our investments to be as cost-efficient and opportune as possible, and this involves the currency and relative levels of the ASX200 against its US and Asian comparitives.
But all in all, this is something we should be watching closely for.