Lauren Hua

What happens to the economy when the housing market cools?

Last week we discussed the sectors which would be impacted by a housing decline. In this article we discuss the implications to the economy in a housing downturn. We have seen auction clearance rates dropping in most areas recently and with more rate rises anticipated, interest in the housing market is weakening. Consumer Spending There is a direct correlation between the housing market and consumer spending. Consumer spending levels will then have an effect on the economy. When house values …

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Stocks affected in a housing decline

The Reserve Bank of Australia (RBA) this week increased the cash rate by 0.5 per cent to 0.85 per cent. The market is expecting more rate rises this year and with this forecast, demand for housing has decreased. If there is a significant housing decline, this will affect some sections on the market. Below are a list of stocks to avoid in a housing correction. Consumer discretionary Consumer discretionary stocks in furniture and appliances will be the most affected by …

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Why do companies delist?

Companies need to maintain certain requirements by the stock exchange to continue as a listed company. Some of these requirements for the ASX include a minimum of 300 non-affiliated investors and a market capitalisation of at least A$15 million. Stocks can voluntary or involuntary delist.  Involuntary delisting can occur when the company has breached one of the requirements of the stock exchange. Another reason may be the company is in liquidation and unable to operate. Voluntary delisting means the company …

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What factors does the RBA use to evaluate interest rates?

There is always a debate in the market about what the next move in the cash rate would be. So what are the factors that the Reserve Bank of Australia (RBA) evaluates when determining interest rate rises or cuts? Inflation Inflation is the rising price of goods and services. When inflation occurs, the purchasing power of the consumer is diminished as the cost of living has increased. The RBA monitors inflation and will take into account inflation figures when deciding …

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The 7 causes of exchange rate movements

Exchange rates can influence stock prices so it is important for share investors to have an understanding on what causes exchange rate movements. Companies with overseas operations may be impacted positively or negatively depending on the direction on the exchange rates. Exchange rates can also influence the amount of overseas funds being invested in Australian shares. We discuss 7 causes of exchange rate movements below. 1.Inflation Countries with low inflation rates will have stronger exchange rates than countries with high …

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