Weekly Impressions

The S&P500 moved sharply lower on Friday, shedding 3% apparently on continued concerns about China's future growth prospects. Despite the correction in recent months, the S&P500 still doesn't look particularly cheap, with the prospective PE still higher than historical norms. The headwinds facing US stock investors stem from the stagnation in expected profitability over the past 12 months and imminent end to the Fed's ZIRP (zero interest rate policy). For Australia, the market’s prospective PE of 14.5x suggests that the market is neither cheap nor expensive at current levels. Like the US, the key headwind facing corporate Australia is the stagnation of future growth prospects, although this has now dragged on for five years now due to the terms of trade shock. As far as reporting season goes, the market continues to punish even small misses from high growth stocks. I discuss the market pricing for Seek.com and the other market darlings that have confronted growth stalls in the past year. (VIEW LINK)
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