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Harbour Outlook: Finely balanced, markets walking a tightrope

Key points Trade tensions again dominated the headlines during June, while the “truce” reached at G20 summit mitigated some left-tail event fears, there is plenty yet to play out and the outcomes are likely to be non-binary. 
Trade tensions and a string of softer than expected economic data led global yields lower in June. 
In line with the global trend, domestic data erred on the side of disappointing with low PMI and busines...

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Harbour Team | Posted on Jul 5, 2019
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Harbour Outlook: Trade tensions impact global growth

Global equity markets retraced from their highs in May with the MSCI World index (in local currency) returning -6.0%. Risk aversion picked up almost entirely due to the breakdown in trade talks between the US and China. This resulted in the US increasing tariffs on US$200 billion of Chinese goods; China promptly retaliated. 

New Zealand and Australian equities weathered the volatility in global markets well...

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Harbour team | Posted on Jun 11, 2019
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Harbour Outlook: More bright spots emerge

Global equity markets continued to strengthen in April with the MSCI World index (in local currency) returning 3.8%. Markets were buoyed by the trifecta of a strong US earnings season, signs that Chinese stimulus have had a positive economic impact and, perhaps not unrelated, eurozone growth rates coming in above expectations...

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Harbour Team | Posted on May 8, 2019
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Harbour Macro Research Day

In recent years, Harbour’s internal six-monthly Macro Research Day has been an important part of our research calendar. It provides an opportunity to undertake a thorough review of the medium-term outlook for the macroeconomy and its implications for fixed interest, equity and multi-asset portfolios.

Our Macro Research Day last week commenced with presentations by economists from two of New Zealand’s largest banks discussing key drivers of the New Zealand economy. This included business confidence and the potential impact of the Reserve Bank capital requirements which has recently been one focus of our research agenda.

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Harbour team | Posted on Apr 16, 2019
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Harbour Outlook: Records broken

Global equity markets continued to strengthen in March with the MSCI World index (in local currency) returning 1.6%, bringing the return for the quarter to 12.6%. Markets were buoyed by a dovish statement from the Fed, whose “patient” approach is unlikely to see any rate rises for some time. A “great” trade deal has been touted between the US and China, which has breathed further life into investment markets...

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Harbour Team | Posted on Apr 8, 2019
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Slowing but still growing

Key points

  • Share markets continued their new year rally, aided by positive noises from trade negotiations and further dovish rhetoric from the US Federal Reserve (the Fed)
  • Economic data released during the month continue to portray lower economic activity, especially in Europe and China, though China has looked to combat this through a range of stimulatory measures
  • Domestically, the economic outlook is continuing to soften, though at this point, the transition appears to be from strong to moderate growth, with risks to the downside
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Harbour team | Posted on Mar 8, 2019
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Harbour Outlook: Fed Pause Party

Global equity markets rebounded strongly in January, led by the S&P 500 which had its strongest January since 1987. The sharp recovery in risk appetite reflected more dovish statements from the US Federal Reserve (the Fed) which is now expected to pause its interest rate hiking cycle until the cross currents of slowing global growth, market volatility and “tightened” financial conditions pass. A better than expected kick off to the US earnings season further whetted investors’ appetite towards risk assets...

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Harbour Team | Posted on Feb 8, 2019
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10 Risks to Watch in 2019

When investing in an uncertain world, it is useful to distinguish between a core view of the most likely outcome for economies and markets, and the key risks that could challenge that assessment.

In our most recent monthly Harbour Outlook we set out our core view. [1] Markets have experienced goldilocks conditions over the past 5 years, with solid economic growth, low inflation and low interest rates. Through 2018 we have see...

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Harbour Team | Posted on Dec 17, 2018
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US earnings season delivers, but raises questions about future growth

Q3 US Earnings season was strong with 410 of the S&P 500 stock index beating consensus expectations. What wasn’t so strong was earnings guidance, which has led the market to downgrade future earnings expectations. While the outlook for US earnings looks less certain, we take some comfort from macroeconomic data which paints a solid picture of economic expansion.

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Chris Di Leva | Posted on Dec 13, 2018
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Outlook: Equity Market Pullback

Key developments

For much of the year, the main theme has been global bond yields inching higher as US Federal Reserve continues normalising interest rates; while at the same time equity markets also moved steadily higher, supported by solid global growth. However, finally in October equity markets experienced a noticeable and widespread pullback.

Chart 1. Equity market levels since the beginning of 2018

The New Zealand eq...

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Harbour Team | Posted on Nov 6, 2018