If you are tuned in to the movement of financial markets you will be well aware of the volatility being experienced in recent weeks. Over the past three weeks the ASX200 has fallen just on 10%. A lot of this fall has been attributed to problems in the sub-prime mortgage market in the USA. Scott Francis has published an article with the Eureka Report that outlines the background to the problems in this market any flow on effects likely to be experienced in Australia. Well worth a read. Click here.
In all the doom and gloom reporting there are a few positive glimmers especially in terms of fixed interest securities and exchange rates. The recent raise in official interest rates will flow on to Australian fixed income securities and it appears that overseas returns may also move northward as investors move from sharemarkets into more defensive treasury bonds. It has been reported that this movement is one of the factors leading to the fall in the Australian exchange rate over recent weeks. This fall will have improved outcomes for those with unhedged international investments, in Australian dollar terms.
Still nothing like the 10% falls in Australia.