The S&P/ASX 200 (ASX: XJO) gave back 0.6% over the week while US stock markets hit more turbulence, with all three benchmarks falling more than 2% each.
Here are my three key investor takeaways from the week.
Interest rates are going up
During the week, the Governor of the Reserve Bank highlighted that it may be prudent to consider increasing interest rates in 2022, given the threat of inflation driven by the oil price.
In fact, Westpac’s team now expect this to come as soon as September. But in an important insight to the population and investors, they highlighted an important, but oft-forgotten point, that we must look at the ‘whole interest rate cycle’ not just the first increase. They expected rates to peak at 1.75%, which is clearly still very low from a historical viewpoint.
Bye, bye Sydney Airport
Friday saw the end of Sydney Airport Holdings Pty Ltd (ASX: SYD) as a publicly listed entity, with the market no longer able to see an important insight into traffic flows and tourists entering our country.
It was the last remaining airport on the ASX, purchased by a consortium of pension funds who will now run it alongside their electricity grids and toll roads.
Perspective in crises
Recency bias is one of the biggest risks in markets. That is, chasing the most recent returns such as those occurring in the oil market; both professional and amateurs are prone to this.
It is worth keeping in perspective the current ‘volatility’ in markets with the S&P 500 down just 11% in 2022 and the S&P/ASX 200 (ASX: XJO) around 7% despite the backdrop of war. This comes after returns of 28% and 17%, respectively, in 2021.
