Weekly Market Recap
Week in review
- Australia contracted by 0.3% in 1Q (1.4y/y)
- Retail sales for April fall by 17.7%m/m
- ECB announced another EUR600bn in bond purchases
- Australia business and consumer confidence
- Australia housing finance
- US FOMC meeting
Thought of the week
Global equities continued to rally last week as the ‘things are less bad’ trade continued. The economic outlook is becoming ‘less bad’ as COIVD restrictions are eased and spending picks up but that still doesn’t equate to things being good. The economic draw down is likely to be as large as that experienced during the GFC and given the impact on the services sector a larger amount of economic output which is lost will not be recovered. However, markets are forward looking preferring to focus on the potentially shorter duration of any recession and fiscal and monetary largesse to keep equities higher. This week’s chart shows the peak to trough decline in forward earnings per share in the GFC and the current period. A decline in the earnings outlook could unwind the ‘not bad’ trade.
Not bad meaning bad, but bad meaning good
Decline in forward earnings per share
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.