Noticias del mercado & perspectivas

As we sit here and review the last weeks of 2024, it has dawned on us that 2024 was the year of wanting everything and getting nothing. Now that might sound like a ridiculous statement considering equities across the MSCI world are averaging double digit returns for 2024. In fact in the US they are on track for two consecutive years of 20% gains or more.

So we certainly gained something, but what we have come to realise is that 2024 was a year of anticipation and more anticipation and more anticipation but nothing being delivered particularly here in Australia. So let us put forward our reasoning. 1. RBA Rates – Pricing v the reality At the start of 2024 it's hard to believe that three rate cuts were fully priced into the cash right by December this year.

The pricing versus the reality facing the RBA in 2024 was one reason that we have probably seen muted movements in currencies and bond markets. We do need to commend the Reserve Bank of Australia (RBA) for navigating what has been a perplexing year in 2024. As mentioned, we start the year influenced by global central banks for multiple rates, driven in particular by the U.S.

Federal Reserve. However, by mid-year, pricing shifted so dramatically it moved through 189 basis points to be factoring in not one but up to four rate increases as inflation remained in a state of suspension as sticky components slow the rate of change and has seen underlying inflation holding at 3.5% and above. Despite this the RBA held rates steady throughout the year and has now adopted a dovish tone at its December meeting.

This is key – its 2024 cautious approach is seeing a 2025 pivotal shift and the board is now making it clear that its focus of managing inflation risks is starting to switch to addressing growth concerns. Market forecasting has easing beginning at the April meeting, the range from economists is February through to May 2025. Whenever it starts, the consensus between the market and the theoretical world is the same – one cut will bring several and come December 2025 the belief is the cash rate will be as low as 3.6%. 2.

Labour Market The other factor that has kept the RBA on the sidelines has been employment. IF we were to look at employment in isolation it should be championed. Underemployment, underutilisation and unemployment as a whole is – strong.

It has completely defied expectations in 2024, with employment levels reaching record highs and participation levels for the population and women in particular also at records. It should be noted that part of the reasoning for this is robust immigration, cautious corporate behaviour toward redundancies and then the big one public sector hiring. Surges in hires for education, healthcare, and hospitality, drove public sector resilience, offsetting weakness in private sectors like manufacturing, mining, and financial services.

What could force a change here is the 2025 Federal election – a minority government or even a change of government could lead to fiscal restraint and dampen employment growth, while a surprising downturn in job data could prompt the RBA to expedite rate cuts and increase the amount of cuts as well. Something traders will need to have their fingers on. 3. Record level Wage Growth Wage growth, a key concern earlier in the tightening cycle, moderated in 2024, easing pressure on policymakers both on the fiscal and monetary side.

At one point their wages were growing at levels not seen since record began. However, it did coincide with an inflation level of a similar rate meaning real wages were flat. Looking into 2025, wages remain a concern for rate watches for the following reasons: Minimum wage has consistently followed the inflation rate with a premium suggesting the will increase exceeding 3.5%.

Industrial relations reforms over the past 2 years have embedded wage rigidity. Finally accelerating wage increases in Enterprise Bargaining Agreements are now averaging 4%. Without corresponding productivity gains, these dynamics could challenge the RBA’s assumptions, complicating the path to rate cuts. 4.

Gravity defying markets Earnings multiples of the ASX 200 and its sector have soared in 2024. It’s a reflection of the optimism bordering on exuberance about peak interest rates and an imminent easing cycle. The forward P/E ratio of 17.9x is well above the 10-year average of 16.0x and significantly above its historical average of 14.2x.

Looking into 2025 – yes, these multiples are stretched, but when put into a global context it is understandable and even defendable. For example - Australian equities trade at a 21% discount to the S&P 500’s multiples and expectation for the US market in 2025 is one of further expansion. Thus to sustain these levels robust earnings growth are needed to close the P/E gap.

A 17.0x multiple down from 17.9, would meet expectations. 5. Banks being banks? One area that we note has not just defied expectations but also logic is Australian banks.

The banking sector was the standout performer in 2024. The sector outpaced the broader market by 25%, not hard when you look at CBA which has surged 40% in the past 12 months. It’s even more remarkable when you compare it to the material sector, it has outperformed its cycle peer by 50.2%.

The surge in passive investment flows (exchange traded funds and the like) which is growing at record levels, alongside superannuation sector contributions, fuelled this robust performance considering the Big 4 and Macquarie sit inside the top 20 and make up 45% of the ASX 20. However, this dominance is likely to face challenges in 2025. Key factors to watch include China’s commodity and economic outlook, shifts in risk asset performance, and potential regulatory scrutiny of superannuation’s ties to bank equity.

Coupled with stretched bordering in snapping valuations – the risks underscore the sector’s sensitivity to macroeconomic and policy developments going forward and overdone investment. 6. Iron Ore – heavy lifting Iron ore defied the forecasts in 2024. The expected collapse never truly eventuated, buoyed by cost-curve dynamics and stronger-than-expected demand in the latter half of the year.

Prices exceeded consensus estimates by upward of US$20 a tonne and provided a tailwind for materials. But, and it is a major but, China remains a pivotal factor. Broad-based policy stimulus announcements in late 2024 lifted sentiment, but execution and clarity remain uncertain.

China is looking to stimulate itself in 2025 and that will determine whether materials can close the performance gap with commodity prices in 2025. The other big unknown for Iron Ore – Trump 2.0 and his future tariffs on Australia’s largest trading partner. Signing off 2024 was a year defined by shifting dynamics across monetary policy, sector performance, and macroeconomic trends.

As we move into 2025, investors and traders will face a complex landscape shaped by earnings growth challenges, election-related uncertainties, and potential shifts in global economic momentum and policy. Successfully navigating these factors will come from understanding the macroeconomic signals and sector-specific opportunities they will present.

Trading is a skill that requires continuous development, self-assessment, and refinement. For traders aiming to achieve consistent profitability and long-term success, following a structured process can make the difference between stagnation and mastery. In this article, we’ll explore a systemized five-step process for trading development, designed to help you identify gaps, take ownership of your growth, and implement effective strategies.

Additionally we will discuss not only why traders avoid this approach (including a checklist) and what YOU can expect if you follow through on some of the methods used Why This Approach Is Often Overlooked While the systemized approach to trading development is logical and proven, it remains unpopular among many traders. This is largely because it requires introspection, effort, and patience—qualities that often take a backseat to the allure of quick fixes. Many traders fall into the trap of chasing the "next big strategy" or the "magic bullet" that promises instant success without the need for sustained effort.

Reasons Why Traders Avoid This Approach: - Impatience: The desire for immediate results often overshadows the commitment required for gradual improvement. - Overconfidence: Many traders believe they can succeed without addressing fundamental gaps, relying solely on luck or intuition. - Fear of Failure: Self-assessment can be uncomfortable and may reveal mistakes or shortcomings that traders prefer to ignore. - Lack of Awareness: Some traders simply don’t recognise the value of a structured development process or don’t know how to start. - Shiny Object Syndrome: The constant search for new strategies and tools distracts from the need to refine existing skills and processes. - Time Constraints: Trading development requires time and effort, which may seem daunting when balancing other commitments. Checklist: Are You Avoiding This Process? - [ ] Do you often jump to new strategies without fully mastering your current one? - [ ] Do you avoid reviewing your past trades and learning from mistakes? - [ ] Are you more focused on finding a winning indicator or strategy than improving your discipline and execution? - [ ] Do you feel uncomfortable facing your trading weaknesses? - [ ] Have you neglected setting clear goals and benchmarks for your trading? - [ ] Do you feel you lack the time to dedicate to structured development? If you checked any of the above, it’s worth reconsidering your approach.

A systematic process may seem less exciting, but it’s the cornerstone of long-term success. Your FIVE steps to trading development We have identified FIVE key areas of work to help you take your trading to the next level. Within each we have identified actions and suggested potential resources to help in your development journey.

Step 1: Benchmarking Gap Analysis Objective: Evaluate where you currently stand versus where you need to be in three key domains: technical skills, risk management, and psychological discipline. Steps: Assess Your Current Performance: Analyse your trade history, win/loss ratio, average return per trade, and consistency over time. Identify patterns in your trading (e.g., frequent stop-outs, giving too much back to the market on profitable trades, over-leveraging).

Define Your Ideal State: Identify those situations where you shouldn’t trade eg, when unwell, or routines you can put in place that will help you focus as soon as you look at your first chart of the day eg, realign with your trading plan. Specify what consistent profitability looks like for you. This might include metrics such as a 3:1 reward-to-risk ratio, an 80% adherence to your trading plan, or minimising emotional trades.

Conduct a Comparative Analysis: Pinpoint gaps in your knowledge, execution, or mindset. Ask yourself tough questions: Are you trading with discipline? Are your strategies well-tested?

Do you have a proper risk management plan? How to Achieve It: Use tools like trade journaling software, analytics platforms, or even manual spreadsheets to document and evaluate performance. Consider seeking out mentorship or coaching to gain an external perspective on areas for improvement.

Be honest with yourself. Acknowledging and owning areas of weaknesses is the first step toward progress. Step 2: Identification and Prioritization of the Gap Objective: Isolate the most critical gaps and prioritize them based on their impact on your results.

Actions: Categorize Your Gaps: Knowledge Gaps: Lack of understanding of market conditions, indicators, or trading strategies. Execution Gaps: Poor timing, impulsive decisions, or failing to follow your plan. Psychological Gaps: Fear of loss, overconfidence, or inability to manage stress.

Rank Gaps by Priority: Focus on the gaps that directly affect profitability or pose the highest risk to your account. For example, improper risk management may take precedence over optimizing your charting skills. How to Achieve It: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) specific to your trading.

Use performance metrics to quantify the severity of each gap (e.g., how many trades are lost due to poor discipline?). Limit your focus to the top 2-3 gaps to avoid overwhelming yourself. Step 3: Ownership and Plan Clarity Objective: Develop a clear, actionable plan and commit to executing it with accountability.

Action: Create Specific Goals: Example: “Improve adherence to my trading plan from 80% to 90% over the next month.” Break Down the Plan: Define daily, weekly, and monthly tasks. For instance: Daily: Review and refine your watchlist. Weekly: Analyze trade outcomes and adjust strategies.

Monthly: Evaluate progress against set benchmarks. Identify Required Resources: Educational materials (books, courses, webinars). Tools (backtesting software, risk calculators, journaling platforms).

Support systems (accountability groups, mentors, or trading communities). How to Achieve It: Use SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to structure your plan. Establish accountability through regular check-ins with a trading partner or coach.

Create visual reminders (e.g., a whiteboard or app) to keep your plan front and centre. Step 4: Learning and Development in Real-Time Objective: Apply your learning to live or simulated markets to reinforce skills and refine strategies – then take LIVE action. Actions: Using a Demo Account for new approaches: Practice executing trades under realistic market conditions without risking real capital.

Setting up a “ghost account” alongside your LIVE account which can be used to test new strategies or see the impact of scaling before you do it in practice (so you get psychologically ready for those bigger profit and loss numbers) Have set criteria for when you will transition to live trading to reduce the chance of procrastination for taking your next step. Use a Trade Journal: Record every trade with details such as entry/exit points, rationale, outcome, and emotions. Analyse trends over time to uncover recurring mistakes or successful behaviours.

Embrace Feedback: Treat mistakes as learning opportunities. Ask, “What went wrong, and how can I fix it?” Review your trades weekly to identify progress and areas requiring further improvement. How to Achieve It: Simulate market conditions closely aligned with your trading style (e.g., day trading or swing trading).

Join forums or groups where traders share insights and feedback. Commit to a growth mindset: mistakes are inevitable but invaluable for learning. Step 5: Testing, Implementation, and Refinement Objective: Measure your progress, refine your strategies, and ensure a continuous cycle of improvement.

Steps: Test Against Key Metrics: Evaluate progress using your ‘results barometer’ (e.g., profitability, win rate, risk management adherence). Close the measurement circle: Make data-driven decisions to tweak your strategies or execution plans. For instance, if a strategy has a low win rate, analyse whether the issue lies in the strategy itself or its implementation.

Create a Feedback Loop: Revisit Steps 1-4 periodically to ensure continuous alignment with your goals. How to Achieve It: Set milestones (e.g., quarterly reviews of your trading results). Use A/B testing for strategies to compare performance under different conditions.

Celebrate small wins to maintain motivation. So If I Do These Five Stages, What Can I Expect in My Trading Performance? By committing to these five stages, you can logically expect a transformational shift in your trading.

Systematic development not only addresses gaps in your skills but also enhances your confidence and decision-making abilities. Here are the key benefits and reasons why this is the primary driver for action: 1. Improved Consistency: - Following a structured approach reduces impulsive and emotional trading decisions, helping you stick to your plan. - With refined strategies and clear benchmarks, your results will become more predictable over time. 2.

Enhanced Risk Management: - Identifying gaps in your approach allows you to minimise unnecessary risks and protect your capital more effectively. - A systematic process ensures that every trade is backed by sound risk-reward calculations. 3. Data-Driven Decision Making: - Regular review and analysis of your trades ensure that you’re making informed decisions based on evidence rather than guesswork. Commit the principle of “evidence based trading” to everything you do from here, 4.

Increased Confidence: - Knowing that you have addressed weaknesses and built a solid foundation instills greater confidence in your trades. - This confidence helps you remain calm and disciplined, even in volatile markets. 5. Continuous Growth: - The feedback loop ensures that you’re always learning and adapting to changing market conditions. - This adaptability is crucial for staying competitive in the long term. Ultimately, it is an unavoidable fact that the primary driver for taking action lies in the fact that trading success is not about finding shortcuts but about building sustainable habits and systems.

By embracing this process, you’ll not only give yourself a chance to improve your results but also develop the resilience and mindset required to thrive as a trader. Summary Trading is not a one-time skill but a lifelong journey of learning and adaptation. Through following this five-step systemized process, you can take greater control of your development, systematically address your weaknesses, and build on your strengths.

Success in trading doesn’t come from luck but from deliberate effort, discipline, and continuous refinement. Take the first step today, and remember: the best traders are always students of the market. And finally, we are here to help.

Our regular education sessions and videos are there to guide you, offering detailed explanation and clarity about many of the things covered in this article.

The "Santa Claus Rally" is a well-documented seasonal phenomenon in financial markets where stock prices often rise during a specific period at the end of the year. While widely discussed, it is frequently misunderstood or oversimplified. This article provides a detailed examination of the Santa Claus Rally, including what it is, why it happens, common misconceptions, its historical trends, and a close look at the factors influencing the markets in 2024.

What Is the Santa Claus Rally? The Santa Claus Rally refers to a pattern of stock market gains observed during the last five trading days of December and the first two trading days of January. This seven-day window, now an established market belief, was first identified by Yale Hirsch, who documented the Santa Claus Rally phenomenon in the 1972 edition of the Stock Trader’s Almanac.

It has since become one of the most recognized seasonal patterns in financial markets, has historically delivered positive returns across major indices, including the S&P 500 and Dow Jones Industrial Average. The phenomenon stands out because of its precise timing and consistent performance, making it distinct from broader year-end trends. Key Characteristics: Defined Timing: The rally occurs between December 26 and January 2, excluding earlier December market activity.

There is a common misconception that it may occur earlier we will discuss this later, Short-Term Nature: It is a brief but significant period, often viewed as a sentiment gauge for markets not only during but subsequent to this defined period. Predictive Potential: A strong or weak rally can sometimes hint at market behaviour in the early months of the new year. Why Does the Santa Claus Rally Happen?

The rally is driven by a combination of market psychology and market dynamics. While no single factor is definitive, the interplay of several influences creates favourable conditions for this pattern occurring. With these factors we will not only define each in turn but suggest the potential impact on such a rally.

Tax-Loss Harvesting Winds Down Definition: Tax-loss harvesting is when investors sell underperforming assets to offset capital gains, reducing their taxable income. Impact: This selling pressure, which weighs on markets earlier in December, subsides by the end of the month. With the selling completed, buying often resumes, pushing prices higher.

Holiday Cheer and Optimism The festive season fosters consumer and investor optimism. Strong holiday spending boosts confidence in consumer-driven sectors, and this optimism often spills over into the broader market. Investors may feel more inclined to take risks, leading to upward momentum in stock prices.

Institutional Repositioning Definition: Fund managers adjust portfolios at year-end to present favourable performance in annual reports. Impact: This often involves buying top-performing stocks, which adds upward pressure to the markets during the rally period. Low Trading Volumes Many institutional and retail investors take time off during the holidays, leading to lighter trading volumes.

In this environment, even modest buying activity can significantly impact prices. New Year Positioning As the year ends, investors reassess their portfolios, positioning for anticipated trends in the coming year. This activity often results in fresh buying, particularly in growth sectors.

Historical Performance relating to the Santa Claus Rally The Santa Claus Rally has proven to be a reliable phenomenon, delivering positive returns in most years. On average, the S&P 500 gains between 1% and 1.5% during this period. Historical Trends: The rally has produced gains in approximately 75% of years since it was first documented.

Its absence has occasionally been a precursor to weak market performance in January or even the full year. Key Examples: In 2008, amidst the global financial crisis, the Santa Claus Rally still materialized, providing a brief positive momentum during a challenging year. In 2015, the rally failed to occur, and markets experienced heightened volatility in January, highlighting its potential predictive significance.

Common Misconceptions about Santa Claus Rallies Despite its prominence, the Santa Claus Rally is often misunderstood. Some of the most common misconceptions include: Timing Confusion? Many believe the rally spans the entire month of December or starts before Christmas.

In reality, it is strictly confined to December 26–January 2. Any other December market move will be due to other market forces, Assumption of Guaranteed Gains? While historically frequent, the rally is not guaranteed.

External shocks or weak economic data can disrupt the pattern. Driven Solely by Retail Investors? A commonly held myth suggests that holiday bonuses or retail investor activity drives any such the rally.

In fact, as referenced above, institutional actions like window dressing and repositioning play a larger role. Overlap with Other Effects? Seasonal trends like the December Effect (general market strength in December) and the January Effect (small-cap outperformance in January) are distinct phenomena often conflated with the Santa Claus Rally.

Do we see a Santa Claus Rally Across World Markets? The Santa Claus Rally is most studied and reported for U.S. markets. While similar patterns may occur globally, their timing and drivers vary, but there is some evidence that may be of interest to those investing outside the US. 1.

European Markets United Kingdom (FTSE 100): The FTSE 100 has shown a tendency to perform well during the last week of December and the first week of January, much like the U.S. markets. A 2017 study by Schroders found that the FTSE 100 recorded positive returns in December approximately 78% of the time since 1986, with an average return of 2.4%. Germany (DAX): The DAX also tends to see year-end strength, reflecting broader European investor sentiment and repositioning similar to the U.S.

German equities benefit from strong consumer activity during the holiday season and institutional adjustments at year-end. 2. Asia-Pacific Markets Japan (Nikkei 225): The Nikkei 225 often experiences a "New Year Rally," which includes strong performance in the last few trading days of December and the first week of January. This trend is partially driven by institutional investors repositioning their portfolios for the new fiscal year (starting in April) and holiday optimism.

China (Shanghai Composite): While the Santa Claus Rally is less pronounced in Chinese markets, some evidence suggests a year-end rally occurs due to investor repositioning before the Lunar New Year (which falls between January and February). Australia (ASX 200): The Australian market often mirrors the Santa Claus Rally, with December being one of the best-performing months historically. Tax-related incentives also play a role, as Australia's fiscal year ends in June, leading to a broader seasonal trend than in the U.S.

Key Metrics to Watch Several indicators can help identify whether a Santa Claus Rally is likely or already underway, I have identified FIVE that may be particularly noteworthy: Market Sentiment Indicators Tools like the AAII Investor Sentiment Survey and the VIX (Volatility Index) reveal investor mood. Declining fear levels, as measured by the VIX, often support rally conditions. Sector Performance Growth-oriented sectors such as technology and consumer discretionary tend to lead during this period, reflecting holiday-driven optimism.

Trading Volume Trends Low volumes are typical during the holidays. However, any surge in buying activity can amplify upward price movements. Macroeconomic Data Economic indicators such as inflation figures or employment data can heavily influence sentiment.

Positive surprises may bolster the rally, while negative shocks could dampen it. Market Breadth A strong rally typically sees broad participation, with a high percentage of advancing stocks. Narrow gains driven by a few large caps indicate weaker underlying momentum.

What About This Year? As we approach the Santa Claus Rally period for 2024, several factors suggest potential market behaviour: Federal Reserve Actions The Fed has been gradually lowering interest rates, with the target range now at 4.5%–4.75%. While this policy supports market liquidity, concerns about persistent core inflation (hovering around 2.7%–2.8%) may lead to cautious policymaking in December.

Future rate cuts remain contingent on positive economic data. Market Performance The S&P 500 has seen year-to-date gains exceeding 27%, recently achieving record highs. This reflects robust investor confidence, with technology and consumer discretionary sectors leading the charge.

Strong earnings reports, such as Lululemon's 15.9% surge, underscore the strength of consumer-driven stocks. Economic Indicators Employment remains resilient, with November adding 227,000 jobs, though the unemployment rate has ticked up to 4.2%. This stabilization signals a soft landing for the economy.

Holiday retail sales projections are strong, if there are additional indications that his may be widespread, it may feed into positive reporting of Q4 earning due in January, this may continue the buoyancy of current market sentiment over the festive period, Geopolitical Factors Trade tensions, including potential new tariffs, introduce uncertainty. These policies could lead to inflationary pressures, dampening consumer spending. Any escalation in existing global conflicts, notably the Middle East situation may also obviously impact quickly and significantly on sentiment.

Investor Sentiment Despite high valuations, optimism remains buoyant, supported by historical patterns favouring December as a strong month for equities. However, caution is warranted given current market highs and the potential for market participants deciding valuations are high enough for right now. Summary The Santa Claus Rally remains a fascinating and historically consistent market phenomenon, driven by a mix of seasonal optimism, institutional actions, and economic conditions.

To stay on top of what is happening during this interesting period in markets may offer opportunity as well as inform risk management, For 2024, the stage appears set for a potential rally, with favourable monetary policy, strong market performance, and resilient economic indicators providing support. However, investors should monitor inflation trends, geopolitical developments, and market sentiment closely as the year draws to a close. Although primarily described in relation to US markets, there is evidence of similar phenomenon in other world markets which we have briefly referenced also.

Understanding the drivers and metrics of the Santa Claus Rally can help investors navigate this unique market period with confidence and insight.

With 2024 fast approaching its conclusion we thought it best to have a really good deep dive into where the Australian economy sits and therefore where the opportunities and risks are for 2025. It's pretty clear that things are soft to say the least but there are signs the household is stirring. Government spending is remaining elevated, inflation is moderating but growth is poor.

So let's dig into the data that matters The Consumer Retail sales saw a solid lift in October 2024, growing by 0.6% month on month (MoM) and 3.4% year on year (YoY)—the strongest annual growth since May 2023 and that is before we see the full picture of Black Friday sales which are on track for a record print with estimates as high as $7.2 billion for the period. This improvement indicates that consumers are starting to spend some of the Stage 3 tax cuts introduced in mid-2024. We should point out that a significant portion of the Stage 3 tax relief appears to be going into savings rather than immediate consumption.

Household deposits surged by 8.3% YoY reinforcing the notion that Australians are prioritising financial security over spending. This has been reinforced by the latest GDP figures – more on that later However what’s also telling heading into the end of the year is consumer sentiment has rebounded although modestly. We will say it's not a high bar as consumer sentiment was at levels not seen since the pandemic.

But it is picking up and that must be seen as a positive. Wage growth appears to be slowing, a weaker signal despite continued strength in employment figures. All this creates a mixed picture of the consumer for 2025.

We expect a gradual recovery in spending as rate cuts are likely in 2025, the full effect of the Stage 3 tax cuts hit full levels ($23 billion to be exact which is about 0.8% of GDP) and the Federal Government gives out more handouts with an election at hand. This is likely to support consumption over the full year however it’s not going to create an immediate boom. We will be monitoring consumer staples and discretionary sectors for signs of movement in the early part of the second quarter.

The Private Side of credit Private credit growth continues to surprise on the upside, something that is likely to keep the RBA up at night. October’s 0.6% MoM increase was above expectations and that led to YoY growth being up a staggering 6.1%—the fastest rate since May 2023 and this after 13 rates over the previous year. This growth is mainly down to housing and overall credit growth picking up significantly.

However, credit growth appears to be nearing its peak, likely to plateau around 6.5% y/y in the coming months. Several factors signal moderation ahead: Business Investment: Surveys show a downgrade in capital expenditure intentions. Home Loans: Demand is likely to stabilise as dwelling price growth flattens.

But the RBA cutting rates may change the trajectory later in the year Personal Credit: Slowing household borrowing suggests cautious consumption and a switch back to savings which manifested in Household deposits growing by 1.3% MoM in October seeing the annual growth in savings to 8.3%strongest pace since mid-2022. Housing Market Shows Signs of Cooling Dwelling prices are clearly losing momentum. November prices edged up just 0.1% MoM—the weakest monthly gain since January 2023—while annual growth moderated to 5.5%, the slowest since September 2023.

The number of dwelling sales also weakened sharply, though some of this reflects temporary reporting distortions. Any sort of recovery is projected only after the RBA begins cutting rates, which again is likely to be in the latter half of 2025. This cooling trend aligns with broader economic signals of moderation in housing demand.

This is a problem for the Bank and REIT sectors. The multiples in these two sectors are at historically high levels. The fundamentals backing banks in particular are starting to look shaky as loan growth is stagnant and house prices are falling in 2025.

Will the bank lead recovery continue next year? That is our question for the market. The Economy and all the rest GDP – is faltering there is no doubt about that now.

Figures to the end of September showed, Australia’s real GDP expanded by just 0.3% QoQ and 0.8% YoY well below the consensus 0.4% and 1.1% expected. This is a materially disappointing outcome and has triggered a new cyclical low, not seen (excluding the pandemic) since December 1991. The questions from the GDP figures are vast and need to be unpacked.

Any recovery in subsequent forward quarters is expected to be modest. As we discussed earlier, households and businesses are grappling with structurally higher cost bases, the need for increased savings and a peak in credit - this cannot be fully offset by potential easing of monetary policy. The RBA has a forecast 1.5% YoY for the final quarter of 2024.

Achieving this would require a significant 0.8% QoQ expansion, which seems increasingly unlikely given current economic dynamics and even if we take into consideration the Black Friday sales. A miss on this target could force the RBA to revise down its short-term growth outlook. Key Drivers Behind Weak Economic Performance on the Headline.

Household Sector Strains: The household sector remains weak, with aggregate spending declining slightly in Q3. Rising costs and weak income growth are pressuring budgets, curbing consumption, and keeping the sector in a vulnerable state. Contributed 0.0% in the quarter.

Business Investment Slows: Business investment softened further, reflecting heightened caution amid economic uncertainty and higher operating costs and tight labour markets in areas of need. All saw 0.0% contribution in the quarter Surprising Uptick in Dwelling Investment: Dwelling investment provided an unexpected positive contribution, rebounding slightly from a weak base. However, this increase is unlikely to represent a sustained trend given broader headwinds in the housing market.

Public Sector Reliance: Countercyclical public demand was the sole driver of growth, accounting for all the economic expansion in Q3 and the past year. Think about that – the only reason Australia didn’t have a negative quarter was from government spending. While this has supported the labour market and provided a buffer to broader weakness, over-reliance on public spending raises major sustainability concerns.

Per Capita recession and Productivity Woes GDP Per Capita Declines: The headline GDP numbers mask a persistent decline in per capita growth. Q3 marked the seventh consecutive quarter of contraction, leaving GDP per capita 2.2% below its Q2 2022 level, that is a horrible story. Productivity Drag: Productivity remains a significant weak spot, further undermining economic resilience.

Falling terms of trade have compounded this issue, leading to a marked drop in living standards. Real net national disposable income per capita has declined in five of the last six quarters, echoing the negative income shock seen during past terms-of-trade retracements. Compensation Pressures: Weak productivity has translated into falling compensation for employees, which in turn is easing unit labour cost pressures.

However, this decline in compensation is exacerbating household financial challenges, limiting their ability to support growth through spending. Where does this leave the RBA? The RBA faces a complex balancing act.

Weak economic growth underscores the need for interest rate cuts to support demand. However, persistently high inflation keeps the central bank in a cautious stance, limiting its room to manoeuvre. Additionally, the labour market remains tight, partly due to public sector demand, which inadvertently keeps inflationary pressures elevated.

This dynamic complicates the RBA’s ability to deliver meaningful monetary easing in the near term. So where does this leave markets for 2025? Structural Growth Concerns The Australian economy remains heavily reliant on two unsustainable drivers: Public Sector Spending: While critical in the current environment, excessive dependence on government expenditure highlights a lack of private sector dynamism.

Population Growth: Expanding population numbers are bolstering headline GDP but masking underlying weaknesses in per capita terms. Without addressing these structural imbalances, along with improving productivity, achieving robust and sustainable economic growth will remain elusive. We are therefore mindful of sectors that have run ahead.

The ASX 200 has just printed 4 record all-time highs in the past 8 trading days. Momentum indicators are running hot and overbought signals are flashing. Couple this with the economy falling into the end of the year. 2025 is likely to be a story or two – a recalibration in the first half – followed by a recharge in the second half.

With geopolitics thrown in and other issues. Volatility is likely to be back with a vengeance in 2025.

Top 5 Benefits of a MT4 Demo Trading Account A MT4 Demo trading account is a virtual trading account that allows you to make virtual trades with play money. Demo trading accounts replicate Live trading accounts, but it removes the risk of losing your own trading capital until you are comfortable trading with real money. Most Forex brokers now offer a trial period of their Metatrader 4 demo account to those who want to familiarise themselves with a trading platform.

A Demo trading account is an ideal way to learn about a platform and how to place and manage trades. In a way, a Demo trading account is your ‘L’ plate when you’re just starting or learning to trade. At GO Markets, we provide the MetaTrader 4 (MT4) platform for a trial period of 30 days.

In this article, we will outline the major benefits of using a Demo trading account before going “Live”. These benefits include: 01. A Demo Trading Account is Free There is no cost to download and access a Demo trading account from your broker.

The only thing you need to provide is your name and email address and other relevant contact details. This is to make sure that you can also get support from your FX broker or provider in case you have any question about the Demo trading account or the platform. 02. Theory Into Practice If you’re new to FX trading, there is a lot to learn, especially about the mechanics of how an FX trade works.

For example, you need to know the different lot sizes, what is leverage and how you can use it for your trading, margin requirements, order types, and stop losses. Using a Demo trading account is the best way to put what you have learnt into practice. This will help you gauge your level of understanding before you commit real money.

Gaining any level of confidence in FX trading, no matter how small, always begins on a Demo trading account. 03. Familiarise Yourself With The Trading Platform If you’re a new trader, one of the most important things to do is to familiarise yourself with a trading platform. This is because a trading platform is your vital tool to execute your trades.

The more familiar you are to your chosen trading platform, the better and more efficient you could be with your trading. You also have to consider that different Forex brokers offer different trading platforms. So, it is important that you choose a trading platform that suits your trading style.

Alternatively, if you’re an existing trader and you’re moving from one broker to another, you may be required to use a different trading platform to one that you are used to. Once again you will need to familiarise yourself with the new platform. This process may take time, and a Demo trading account is the best way to get used to a platform without making costly mistakes. 04.

Testing a Trading Strategy There is a saying that goes, “Plan the trade, and trade the plan.” Planning your trades and sticking to your trading plans are vital if you are set on becoming a successful trader. However, it could be easier said than done. Planning your trades and executing your plans accordingly takes time and discipline.

And this is where a Demo trading account could be helpful as you need time to develop and adjust your trading plan and strategy. So whether you are trading manually or using an Expert Adviser, it is best to test your trading strategy on a Demo trading account. A Demo trading account allows you to test and refine your trading strategies without committing real money until you are happy with the results. 05.

Testing Trading Tools Most brokers now provide additional trading tools as a value add to their trading platform. For example, GO Markets provides the MT4 Genesis, which is a comprehensive suite of trading tools. Before using any additional trading tools, it’s highly recommended to test them out on a Demo trading account.

This will help you become more familiar with the tools and determine which ones are the most suitable and helpful for your trading needs. Considering all the benefits we’ve discussed, one thing to remember is that a Demo trading account does not fully prepare you for when you decide to trade for real. Despite all the benefits of Demo trading, it’s also important to note, that there are some drawbacks. » Different Trading Psychology – No matter how long you practice on a Demo trading account, there is no substitute for Live trading.

The main reason is the different psychology when using a Demo trading account compared to a Live trading account. Your mind acts differently once you are no longer practicing with “play” or “virtual” money, and you start trading with your hard earned cash. Where you may have traded larger lot sizes on a Demo trading account without too much concern, it may be harder to pull the trigger on a Live trading account.

Where a losing trade did not matter so much on a Demo trading account, it may be harder to accept a similar loss on a Live account. You may have been confident of your trading strategy on the Demo trading account, but now you’re about to go Live, you’re not so sure. » Risk Management – When downloading a Demo trading platform, beginners can choose how much virtual money they can play with. If the Demo trading goes well, this could easily lead to a false psychological expectation that placing large trades and making large profits is easy.

This leads to poor risk management practices that can carry over to Live trading. This usually leads to a poor trading performance. Demo trading is an important part of becoming a successful trader.

To get the most out your Demo trading I suggest the following: (1) Hone your skills and refine your trading strategy, and most importantly, learn from your mistakes. (2) If you intend to eventually start trading a Live account with a minimum balance of $500, open a Demo trading account with $500. Choose a starting balance on your Demo trading account similar to an amount that you would start on a Live trading account. (3) Treat Demo trading as if it’s the real deal. Try to feel all the emotions of trading – how it feels to have both winning and losing trades. (4) Stick with Demo trading until you are confident enough to trade Live.

At GO markets we offer a 30-day trial of our MT4 platform to both potential. Please click here to start your trial period today. Clients who open and fund a Live trading account with a minimum of $200, are able to get access to a “non-expiring” Demo account.

Please note that trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. You should only trade if you can afford to carry these risks.

Our offer is not designed to alter or modify any individual’s risk preference or encourage individuals to trade in a manner inconsistent with their own trading strategies. See our MT4 tutorial videos here. Rom Revita | Sales Manager Rom is the Sales Manager at Go Markets Pty Ltd and manages the day-to-day running of the Sales, Support and Marketing teams.

He has been with the company since 2013 and is also one of our two appointed Responsible Managers, helping to ensure that the company follows all AFSL regulatory requirements. Rom has extensive financial markets experience and originally comes from an equities & derivatives trading background. He has served on the Trading & Sales Desk with several large broking houses, and now specialises in Margin FX and CFDs.

Connect with Rom: [email protected]

Artificial Intelligence (AI) is no longer a futuristic concept; it is a rapidly evolving reality reshaping industries, including financial markets. For traders, understanding how AI impacts price action and adopting strategies to adapt to these changes are critical to staying competitive. This article aims to explore AI's current capabilities, its profound influence on price action, but also offer some thoughts on how traders can potentially thrive during current and future changes that may impact markets.

What is Artificial Intelligence? Artificial Intelligence refers to the ability of machines to simulate human intelligence and perform tasks such as learning, reasoning, problem-solving, and planning. AI can be broadly categorized into three types: Artificial Narrow Intelligence (ANI): Specialized AI systems designed to perform specific tasks (e.g., chatbots, fraud detection, and algorithmic trading).

Artificial General Intelligence (AGI): A hypothetical stage where AI matches human cognitive abilities, capable of learning and reasoning across diverse tasks. Artificial Superintelligence (ASI): An even more speculative stage where AI surpasses human intelligence in every way. Currently, ANI dominates the landscape and drives innovations across industries.

For financial markets, ANI forms the foundation for tools and algorithms that enhance trading efficiency, accuracy, and decision-making. What is Machine Learning? Machine learning (ML) is one of the most important technologies underpinning AI and its potential applications in the trading world and so is worth just a little more explanation.

In simple terms, it may enable machines to learn from data, identify patterns, and make predictions or decisions without requiring explicit programming for each scenario. Let’s look briefly at the key elements, types and applications of ML that may have trading relevance. Key Elements of Machine Learning Data: Machine learning relies on large datasets, such as historical market prices, trading volumes, and economic indicators.

Algorithms: These are mathematical rules and calculations used to analyse data and make predictions. They range from simple regressions to complex deep learning models. Feedback Loops: Feedback allows ML models to learn from successes and failures, continually improving their accuracy over time.

Types of Machine Learning Supervised Learning: Machines are trained using labeled datasets, such as identifying bullish or bearish patterns in historical data. Unsupervised Learning: Machines find hidden patterns or anomalies in unlabeled data, such as clustering similar market behaviors. Reinforcement Learning: Machines learn through interaction with an environment, receiving rewards or penalties for actions, making it particularly useful for dynamic trading environments.

Applications in Trading Machine learning drives key advancements in trading, including: Predicting price movements using historical and real-time data. Optimizing portfolio allocations. Detecting anomalies or potential fraud.

Automating decision-making processes based on market conditions. Understanding machine learning is essential because it forms the backbone of many AI-driven trading tools that are reshaping financial markets. Concepts like enhanced trend identification, predictive analytics, and scenario planning all stem from machine learning’s ability to process vast datasets and adapt to changing market conditions.

AI’s Current and Future Capabilities in Trading As the evolution of AI expands into most areas that impact on our world, trading is no exception, AI applications in the financial world span a wide spectrum of uses but most fall into three main categories. This comprise: Fraud Detection: Identifying irregularities in financial transactions. Predictive Analytics: Anticipating price movements based on historical patterns and real-time inputs.

Advanced Decision Support: Assisting traders by analyzing complex datasets and suggesting optimal actions. As ANI technology advances, it is expected to refine these capabilities further, enabling: Enhanced sales forecasting for financial products. Real-time risk management tools.

The development of more personalized trading recommendations. In the long term, these advancements are likely to create a trading environment driven by increasingly sophisticated AI systems. AI’s Impact on Price Action Price action—the study of historical price movements to predict future trends—is foundational to many trading strategies.

AI's integration into trading may begin reshaping this traditional paradigm in several potential ways: Enhanced Trend Identification AI’s speed and accuracy in identifying trends far outpace traditional methods: Faster Recognition: Algorithms can process vast datasets in real-time, detecting emerging trends before they are visible to manual analysis. Greater Accuracy: AI can filter out noise and focus on genuine market movements, providing more reliable insights. Predictive Analytics AI’s predictive capabilities extend traditional market forecasting: Forecasting: Using historical data and complex algorithms, AI predicts market shifts with varying confidence levels.

Scenario Analysis: Simulating multiple market conditions, AI helps traders prepare for diverse outcomes. Changing Trend Lifecycles AI-driven strategies could alter the nature and duration of market trends: Accelerated Trends: Rapid AI-driven trades may shorten the lifecycle of trends, making them more volatile and less predictable. Increased Volatility: High-speed trades based on AI predictions can lead to significant price swings in short timeframes.

Behavioural Impacts AI is likely to influence trader behaviour and market dynamics: Herding Behavior: Similar AI-driven insights can lead to collective actions, amplifying price movements. Strategy Diversification: To remain competitive, traders must develop diverse and creative strategies. Challenges and Risks While AI offers tremendous potential, it also introduces challenges traders must navigate: Increased Market Volatility AI’s speed and efficiency can exacerbate short-term market volatility.

Sudden price movements may trigger stop-losses more frequently, disrupting traditional risk management strategies. Flash Crashes Algorithmic trading can lead to flash crashes—sudden, sharp price declines caused by cascading AI-driven trades. These events create liquidity risks and potential financial losses.

Over-Reliance on AI Dependence on AI systems could lead traders to overlook market fundamentals, exposing them to algorithmic biases and failures. Reduced Effectiveness of Traditional Tools As AI reshapes market behaviour, traditional tools like moving averages may lose reliability, forcing traders to adopt more dynamic approaches. Ethical and Regulatory Concerns AI introduces challenges around transparency, data bias, and compliance with evolving regulations, requiring constant vigilance.

How to Adapt and Thrive To improve the chances of potential better outcomes in a new more AI-driven market, traders must adopt proactive strategies that embrace rather than push away likely changes in the traditional ways of looking at markets. These may include: Review and Refine Your Strategies Evaluate how AI might impact your existing methods, particularly those reliant on lagging indicators. Incorporate real-time data analysis tools to complement traditional approaches.

Action: Conduct stress tests on your strategies under simulated high-volatility scenarios to ensure resilience. Leverage AI for Competitive Advantage Explore AI-powered platforms for market analysis, trade recommendations, and risk management. Develop custom AI models tailored to your trading style.

Example: Use machine learning to identify unusual trading volumes across multiple markets, providing actionable insights into potential opportunities. Strengthen Risk Management Practices Adapt stop-loss levels dynamically based on real-time volatility metrics. Diversify portfolios to reduce exposure to single-market risks.

Action: Incorporate scenario analysis tools to prepare for unexpected market conditions, such as flash crashes or sudden policy changes. Stay Informed and Educated Keep up with advancements in AI and its applications in trading by attending webinars, reading industry reports, and engaging with experts. Experiment with AI tools in demo accounts to understand their capabilities and limitations.

Example: Test AI-based predictive analytics platforms to evaluate their effectiveness in your trading strategies. Harness Human Creativity and Judgment Combine AI-driven insights with personal market knowledge to develop hybrid strategies. Focus on areas where human intuition, creativity, and adaptability can complement AI’s analytical power.

Action: Use AI as a decision-support tool, relying on your judgment for execution and fine-tuning strategies. Conclusion AI is transforming financial markets, presenting both opportunities and challenges for traders. While its speed, accuracy, and predictive power can disrupt traditional methods, those who adapt their strategies and leverage AI’s potential stand to thrive.

By refining approaches, strengthening risk management, and staying informed, traders can navigate the complexities of AI-driven markets and position themselves for success. The future of trading is here. Embrace the change, adapt your strategies, and unlock the potential of AI to gain an edge in an increasingly competitive market.