Weekly Market Recap
Talk turns to tapering
Week in review
- Australian wage growth 1.5% y/y 1Q21
- Australia unemployment rate falls to 5.5%
- Australia consumer confidence falls to 113.1
- U.S. consumer confidence
- Australia capital expenditure
- RBNZ monetary policy statement
Thought of the week
Tapering talk by the U.S. Federal Reserve last week added to already elevated investor nerves as bond yields rose and selling pressures in equity markets intensified. A sell-off in equities is perhaps not unusual given the strength in equity markets over the past year. It’s worth remembering that the S&P 500 was at an all-time high only a few weeks ago. Investors would probably not be so nervous if valuations were lower, but the elevated price of equities is amplifying concerns and adding to selling pressures in certain sectors. This week’s chart illustrates that the sectors in the U.S. equity market which have fallen the furthest from their recent peaks in April and May are also the ones where price-to-earnings ratios are the richest against their 10-year average. The strength in the earnings outlook should continue to support equities more broadly, particularly for cyclically geared companies, but highly valued sectors and companies may face continued pressure.
Highest valued sectors face greatest selling pressures
Sector return since recent market peak and forward P/E ratios
JPMorgan Global Strategic Bond Fund
A wise traveler plans for the unknown. With a focus on mitigating downside risk, JPMorgan Global Strategic Bond Fund strives to deliver attractive risk-adjusted returns in different market conditions by investing flexibly across global fixed income markets.