Solid year tipped for dollar but outlook mixed for shares
The average forecast is for US102¢, so the dollar is expected to remain strong for at least another 12 months. No surprises there.
Paul Bloxham, from HSBC Australia, believes the currency will slip to US95¢ by year's end, while Steven Keen, of the University of Western Sydney, and Andrew McManus of ANZ, think the dollar will rise to US105¢ - the highest of the lot.
But opinions vary greatly when it comes to our sharemarket.
The benchmark S&P/ASX 200 index closed last year on 4648.9 points, up 14.6 per cent on the year, after rebounding strongly in the second half. But projections for the end of this year range from a 14 per cent decline (to 4000 points) to an increase of 18.3 per cent (to 5500 points - Stephen Koukoulas from Market Economics being the most optimistic).
It's a confusing picture and it's not helped by the fact that our panel expects shares to improve by just 4.3 per cent on average over the next 12 months.
However, one thing it does mean is that the surprising recent surge in share prices is not expected to be repeated this year.
Looking to other major sharemarkets, Japan's Nikkei 225 is expected to be the worst of the lot, losing an average 7.8 per cent by December 31.
London's FTSE 100 index is tipped to track sideways, gaining a meagre 1.4 per cent.
The S&P 500 is expected to perform the strongest, increasing by an average 6.6 per cent. It follows a 13.4 per cent increase for the past 12 months. So an increase of that magnitude is not expected to be repeated, much like Australia's sharemarket.
Meanwhile, projections vary for the yield on Australia's 10-year government bonds. By the end of this year, the expected yield spans a range from 2 per cent to 4.2 per cent. But the average expected yield from our panel is 3.3 per cent, representing a 0.1 per cent increase on today's yield (3.4 per cent).
Frequently Asked Questions about this Article…
The article reports the panel expects the Australian dollar to stay above parity with the US dollar. The average forecast is US102¢ (about US$1.02). Only four panellists expect it to fall below US100¢ by year‑end, and none expect it to be worth less than US95¢. Individual views range from Paul Bloxham (HSBC Australia) who expects a slip to US95¢, to Steven Keen (University of Western Sydney) and Andrew McManus (ANZ) who see it rising to US105¢.
The S&P/ASX 200 closed last year at 4,648.9 points after a 14.6% rebound in the second half. Panellist projections for the end of this year range widely—from a 14% decline to 4,000 points up to an 18.3% rise to 5,500 points (the most optimistic view from Stephen Koukoulas of Market Economics). On average the panel expects a modest 4.3% gain over the next 12 months.
According to the panel cited in the article, the surprising recent surge in share prices is not expected to be repeated this year. The overall picture is mixed and panellists anticipate only a modest average improvement in shares.
The panel expects different outcomes across major markets: Japan’s Nikkei 225 is forecast to perform worst (an average loss of 7.8% by December 31), London’s FTSE 100 is tipped to be largely sideways with a small 1.4% gain, and the US S&P 500 is expected to perform best with an average increase of 6.6% (after a 13.4% rise over the past 12 months).
Panellists’ projections for Australia’s 10‑year government bond yield by year‑end span from 2.0% to 4.2%. The article states the panel’s average expected yield is 3.3% and notes this was described as a 0.1 percentage point increase on today’s yield (quoted as 3.4%) in the story.
The article emphasises wide variation in views: currency forecasts differ (from US95¢ to US105¢) and sharemarket projections for the S&P/ASX 200 range from a 14% drop to an 18.3% gain. The piece describes the overall picture as confusing, reflecting significant disagreement among panellists.
Based on the panel averages in the article, the US S&P 500 is predicted to be the strongest (average +6.6%), while Japan’s Nikkei 225 is expected to be the weakest (average −7.8%). The ASX 200 sits in between with a modest average expected gain of 4.3%, but individual forecasts vary widely.
The article names several contributors: Paul Bloxham of HSBC Australia (expects the dollar to slip to US95¢), Steven Keen of the University of Western Sydney and Andrew McManus of ANZ (both expect the dollar to rise to US105¢), and Stephen Koukoulas of Market Economics (the most optimistic on the ASX 200, forecasting 5,500 points by year‑end).
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