Investors on a wild ride as markets adjust to rapidly rising bond yields | The Business | ABC News
Subscribe: http://ab.co/1svxLVE
Read more here:
The Australian share market experienced big swings this week, as US10 bond yields hit 24 year highs, and as hot local inflation data was digested. By the end of the week, the ASX 200 index managed a modest gain up 0.2% to 8,682. Investment Director at Shaw and Partners Julia Lee joins The Business to explain how rapidly rising global bond yields are impacting share markets. “For one, future earnings are discounted by even more so they look less attractive, secondly if we look at company valuations, well company valuations are impacted negatively because bond yields are going up. But thirdly, if investors are getting five per cent for government bonds, it really competes with equity markets. Do you want to take the equity risk when you’re getting five per cent for the next ten or even thirty years?” Julia Lee also discusses the RBA’s concerns raised in its Financial Stability Review about risks posed by a potential disruptive bond sell off and the opaque financing arrangements among the US hyperscalers. Staying in the tech sector, Julia Lee also offers some insight into the size of the Firmus IPO. Shares in the data centre operator and builder is set to hit the ASX boards on October 23rd.
#ABCNEWS #ABCNEWSAustralia
