Australian equities have surged >16% since mid-December, with the RBA cutting interest-rates last month to the lowest levels in history, local equities have...

Nicholas Forsyth

Market Matters

Australian equities have surged >16% since mid-December, with the RBA cutting interest-rates last month to the lowest levels in history, local equities have been revalued dramatically. An amazing 17/57 World Central Banks have cut interest rates so far in 2015, with the most recent a surprise cut by PBoC last weekend. Australia is rated a 76% favourite to cut rates again today and the below forecasted levels for 2015 are clearly very short term supportive of quality yield paying stocks like the banks e.g. both WBC+ANZ hit all-time highs yesterday. InterbankRates(02/03/15): Current 2.25%, April 2.04%, June 1.85% and November 1.69%. Markets move in enormous sentiment cycles and clearly it's all positive around yield at the moment. US equities corrected almost 10% last September/October on fears of no global recovery. Today, markets are embracing this negative world economic news because it's leading to interest rates plunging around the world. Investors should always remain conscious that markets interpretation of news/circumstances does change and hence they should remain flexible. I believe over the next quarter, investors should be prepared to sacrifice some yield for quality growth. (VIEW LINK)


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