AMP Capital predicts ‘rough months’ ahead for markets
SMSF investors have been warned by AMP Capital that certain event risks in coming months, such as the US election, could result in heightened volatility.
AMP Capital chief economist Shane Oliver says over the long term, shares are predicted to perform well, but there could be some corrections in the short-term.
“September and October are often rough months seasonally and various event risks loom in the months ahead including ongoing debate around the Fed, the Austrian presidential election, Italian banks, the Italian Senate referendum, the US election with support for [Donald] Trump edging up and global growth generally,” Mr Oliver said.
Mr Oliver said if Mr Trump is elected, his policies could result in higher inflation, higher interest rates and a higher US dollar. Growth could take a hit, and a Trump presidency could also result in negative geopolitical and social consequences.
“Clinton’s policies would likely also provide a short-term stimulus but higher marginal tax rates and more regulation may offset the short-term boost,” he said.
“However, after any short-term weakness, we anticipate shares to trend higher over the next 12 months helped by OK valuations, continuing easy global monetary conditions and continuing moderate global economic growth.”
Mr Oliver said there is also a higher risk the Australian dollar which “will re-test its April high of $US0.78 as the Fed continues to delay, presenting challenges for the RBA”.
“Beyond the short term though, we see the longer term downtrend in the Australian dollar ultimately resuming as the interest rate differential in favour of Australia narrows as the RBA continues cutting and the Fed eventually resumes hiking, commodity prices remain low and the Australian dollar sees its usual undershoot of fair value.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.