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Chart of the week: SEASONS GRATINGS AND GREETINGS FOR 2018

19 December 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

 

2018 Asset price returns - year to date


Source: Bloomberg, JP Morgan Chase, and Datastream 

 

Investors have had a very tough year in 2018. There have been very few assets that have risen in price (green bars). These rare gifts have included Brazilian shares (+13.2%), Russian shares (+11.8%) and the US natural gas price (+22%). Australian cash has been the ‘safe haven’ with a notional +1.5% return.

Falling asset prices have dominated 2018. A catalogue of concerns has driven most share markets lower this year. Higher US interest rates, the escalating trade war, emerging market stress, BREXIT and Italy's contentious budget stimulus proposals have undermined confidence. The ‘seasons gratings’ (red bars) include sharp price declines for Australian shares (-7.5%), British shares (-11%) and Turkish shares (-44%). Wall Street has only partly avoided the pain with a -2.8 % price fall. Even Bitcoin has penalised their believers with a catastrophic -74% price decline.

There is still the possibility of a ‘Santa Claus rally’ that sees asset prices improve over the final weeks of 2018. However after such a tough year, even Mr Claus may find that it’s more prudent to keep the cash in the sleigh rather than see these hard earned savings catch fire in the chimney. To all our readers, our hope is that the New Year brings better news for asset prices.

 

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