I think the markets are generally well informed, so clearly there are reasons to be concerned.
QBE Group chief executive Pat Regan
Treasury Wine Estates chief executive Michael Clarke said he would “prefer not” to have a trade war, with the company carrying US brands that are sold in China. American wine exported to China has been hit by extra tariffs since the trade tensions broke out between China and the US.
Mr Clarke said that once the trade war stops Treasury would “be able to sell a hell of a lot more American wine in China. I’m absolutely convinced of that.”
QBE Group chief executive Pat Regan said he was concerned about markets but hopeful a recession could be dodged. “I think the markets are generally well informed, so clearly there are reasons to be concerned,” he said. “I just think there are other scenarios where a recession could be avoided”.
While the inversion of the yield curve dominated headlines there were other concerning moves in bond markets. The interest rate on the 30 year US government bond sank to record lows below 2 per cent, reflecting lower investor expectations for growth and inflation as well as concerns central banks have run out of power to stimulate activity.
Amid the market rout, US President Donald Trump criticised the US Federal Reserve for not doing enough to stimulate markets, and also suggested he would be willing to meet his Chinese counterpart Xi Jinping to resolve the trade impasse.
Mr Regan said he was hopeful that if trade tensions were resolved or the US Fed cut interest rates conditions would improve.“I think in the event of avoiding a trade war, I would imagine we’ll actually see a reaction in the yield curves, we’ll see less pessimism about the future.”
QBE makes about a third of its revenue in the US, and Mr Regan said insurance was more resilient in a weak economy than other industries.
Iron ore futures in China fell 2.8 per cent, approaching the multi-year lows struck earlier in the week. Gold, widely regarded as a safehaven was trading near six year highs. But in late trading, futures markets pointed to a rebound for stocks in the US and Europe.
Super Retail CEO Anthony Hegarty said he was not particularly about the moves in markets. “A Supercheap Auto customer is currently in the outer suburbs of our capital cities,” he said.
“Currently, so long as employment is strong, which it is, so long as we see a bit of wage inflation, which there is potentially signs of. We’re seeing interest rates are down, great, and we’re also seeing some tax benefits coming through.
“For our guy, sitting out there in Parramatta, I think that’s okay. Our customer’s not going to be overly interested in what’s happening on Wall St.”
with Darren Gray, Clancy Yeates, Dominic Powell and Nick Toscano
David Scutt covers markets for The Sydney Morning Herald and The Age
Sarah is a journalist for The Sydney Morning Herald.