Invest
Greenshoots emerge in the Australian economy
Australia has embarked on 28 years of uninterrupted economic growth, which is likely to continue as low interest rates drive stronger housing and consumer spending continues, a fund manager has suggested.
Greenshoots emerge in the Australian economy
Australia has embarked on 28 years of uninterrupted economic growth, which is likely to continue as low interest rates drive stronger housing and consumer spending continues, a fund manager has suggested.

According to head of Australian equities Randal Jenneke, stock markets will benefit from a stronger domestic and international economy, although it is unlikely to have a repeat of this year’s performance.
The fund manager predicts “dividend yield and capital growth to be at around 4 percent in 2020, amounting to an anticipated 8 percent total return from Australian equities”.
Over the long term, as interest rates stay low, Mr Jenneke said the Australian market deserves a premium for being higher quality, well regulated, with a high and stable dividend yield.
Mr Jenneke’s domestic views reflect his expectations for a gradual recovery in global trade and manufacturing that will favor Australia, particularly if the US and China agree to a trade war truce.

He believes Australia’s domestic economy is set to see improved growth in gross domestic product during the course of 2020, after a subdued lift of just 1.7 percent in 2019.
“The RBA (Reserve Bank of Australia) wisely kept its powder dry until it was needed and responded decisively to the weakening domestic economy to cut interest rates three times, pushing the official cash rate down to a record low.
“In 2020, we are likely to see interest rates cut at least once more to a new floor of 50 basis points,” Mr Jenneke said.
“While the RBA’s stimulatory power has almost been exhausted, monetary policy measures are working, with the benefit of lower interest rates being most visible in Australia’s housing sector.
“Auction clearance rates in Sydney and Melbourne have nearly doubled, while home prices have risen by 5 to 10 per cent, depending on region.”
The “wealth effect” felt by consumers is not likely to flow back into the stock market in the short term with “[the] flow-on benefits to retail and housing stocks will likely lag six to 12 months, with companies that service the housing sector, without being leveraged to construction activity, expected to benefit in this environment,” Mr Jenneke predicted.
The fund manager also predicted the Morrison government will help support the Australian economy through changing the tax brackets, which could further support the retail and housing markets.
“While some political maneuvering will be required, I would not be surprised to see the Coalition bring forward tax cuts scheduled for 2021 into 2020. This, coupled with the recent $4 billion infrastructure package, should also help to support an economic recovery next year,” he said
These thoughts are echoed by Fidelity International’s global cross-asset investment specialist, Anthony Doyle, who also believes the government will use taxation as a fiscal stimulus.
“If you think about fiscal conservative, it’s political ideology is defined by small government, a balanced budget and lower taxes.
“If we do see any loosening on the fiscal reigns, it will be on the tax side, which tends to be popular with voters,” Mr Doyle explained.
About the author

About the author


Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more

Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more