Sunset Strip | Aussie market maintained the negative sentiment from rates being left unchanged by RBA
Sunset Strip | Aussie market maintained the negative sentiment from rates being left unchanged by RBA. Turnover was just above $5.5billion. RBA member said AUDUSD has a bit further to fall, Unemployment to go higher and GDP growth needs to hit 3% for unemployment to turn. We don't see GDP growth hitting 3% atleast till 2016H2. If AUDUSD only had a bit to fall, then can we get that adjustment via China downgrade and US Rate rise instead of rate cuts? If RBA is now planning to sit tight, then we will see much more correction than profit taking. Market is running on yield chase while the market forward div yield to bond yield gap is now below 2%. Keep an eye on bond yields; they have moved 20bps in the last few days. The higher they move the more pressure goes on the stretched yield stock multiples. If we continue to see bond yield recover, then we would expect some of the stretched yield stocks (i.e. CBA, TLS, WES and WOW etc) will see more selling pressure. (VIEW LINK)
Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...