Local interest rates are likely to rise in coming months, and global markets are set for a turbulent week, after US President Donald Trump threatened to blow up civilian infrastructure in Iran from tomorrow morning, Australian time, if the Strait of Hormuz is not re-opened. While the latest salvo from the President pushed up the price of oil, equity markets are under pressure. Bond yields have risen while the Aussie dollar has fallen against the greenback

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News in brief

The final auction clearance rate for the past week is set to fall below 50 per cent, a level last hit during the first Covid shutdowns. The preliminary clearance rate came in at 55.5pc, according to Cotality, and given the difference between the preliminary and final rate has been around 6 percentage points, then that final rate could end up showing that more houses were passed in, than sold, last week.

While we have been watching the Middle East, the federal government has been pushing plans to expand the federal parliament by 42 politicians to reflect the nation’s growing population. The problem is the Coalition said they will oppose the concept.

Wait times for electric vehicle purchases has blown out by several months as manufacturers get caught out by the spike in demand. Chinese car maker BYD said the average wait time for its top selling Sealion 7 and Atto 2 models was now between two and three months.

There’s bad news for renters with the market appearing to be at a turning point, and rents set to rise. Across the country, Cotality’s national rental index is up 5.7 per cent, the largest annual change since October 2024, adding about $37 a week to the median rental rate.

Has reality TV had its day? Possibly. The number of unscripted US series premieres fell by 15 per cent last year, and by a third since 2022.

Fear-o-meter

AMP deputy Chief Economist Diana Mousina on investment markets.

Global and Australian share markets are at high risk of further falls in the near term in response to the War with Iran against the backdrop of stretched valuations, political uncertainty associated with Trump & the midterm elections, increasing worries about private credit and AI & tech valuation worries.

We continue to see a 15 per cent or so top to bottom fall in share markets along the way this year, but the risk is that it could go deeper the longer the Strait of Hormuz remains effectively closed.

However, returns should still be positive for the year as a whole thanks to Fed rate cuts likely later in the year, Trump still likely to pivot to consumer friendly policies ahead of the midterms and solid profit growth.

Bonds are likely to provide returns around running yield. Unlisted commercial property returns are likely to be solid helped by strong demand for industrial property associated with data centres.

Australian home price growth is likely to slow to 5 per cent or less due to poor affordability and the RBA raising rates with talk of more to come.

Cash and bank deposits are expected to provide returns around 4.3 per cent.

Fear & Greed Q+A today

On what some of the world's biggest investors are doing in a time of volatility and uncertainty:  

 

“It’s very tempting to take geopolitical events or macro-type events and think that you can forecast stock market returns.

And while you can come up with reasonable expectations about what the real economy will do in the event of those shocks, that information gets priced in very, very quickly into market prices.

 

So that gives you very little edge in terms of determining where returns will be in the subsequent months or years.

By the time you’re reacting to it, the market has already moved.”

 

*General information only. Seek advice tailored to your circumstances before making investment decisions.

Greed-o-meter

Last week, Apple celebrated its 50th birthday. These days, the largest chunk of its revenue comes from a product that's been around for less than 20 years - the iPhone.

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