Don’t let the daily news headlines impact your retirement outcome

 

While global share markets started the year strongly, uncertainty about the outlook has become a key driver of market movements.  Markets are more sensitive than usual and new information can have a large impact on a trading day.

An example is the recent G20 summit held in Argentina, attended by major world leaders. Topics such as climate change, the Ukraine conflict and the alleged assassination of a Saudi journalist in Turkey were all on the agenda.

The trade war discussion between US President Donald Trump and Chinese President Xi Jinping overshadowed the event, with the world focused on the outcome of their first face to face meeting since late 2017.

Share markets initially viewed the outcome of the trade discussion positively. With both leaders agreeing to a 90-day “ceasefire” in their trade war, investors celebrated with major share markets rising sharply. The following chart shows how global share markets reacted to the news:

However, the trade joy was short lived, with investors concerned that the “US/China ceasefire” may have been less positive than initially thought, with share markets falling the next day. The initial sense of security that Trump and Jinping briefly provided was not enough to stabilise markets that are already fragile due to factors such as rising US interest rates and slowing global growth.

The G20 example demonstrates that markets are unpredictable and it’s important to not focus on daily returns.  Super is a long-term investment and short-term volatility should not influence investment decisions.  Cbus’ diversified investment strategy aims to reduce the impact that any one asset class such as shares can have on returns. While your super balance may fluctuate in the short term, it is generally more stable over the long run.