Your investments respond to forces beyond individual company results. Oil prices influence business costs, bond yields affect borrowing, and currency movements change the value of overseas assets.
Understanding these relationships helps you assess what is happening across markets. These are the 5 charts every investor should be looking at to put investment decisions into context.
1. Oil Prices: Watch the Pressure on Costs
Oil affects transport, manufacturing, agriculture, and food distribution. When prices rise, businesses face higher operating costs. Some pass those costs to customers, while others accept lower profit margins.
For your portfolio, the impact depends on what you own. Higher oil prices may support energy producers while putting pressure on airlines and transport businesses.
Pay attention to how long prices remain high. A temporary spike and a sustained increase can have different implications for inflation and interest rates.
2. Bond Yields: Understand Borrowing Conditions
Government bond yields offer insight into market expectations about interest rates, inflation, and economic growth.
Bond prices and yields move in opposite directions. When yields rise, existing fixed-rate bonds generally fall in price as investors seek more competitive returns.
The relationship between short-term and long-term yields also matters. An inverted yield curve, where short-term yields exceed long-term yields, can signal concern about future economic conditions. It does not guarantee a recession.
For investors holding property or shares in businesses with substantial debt, higher borrowing costs can put pressure on cash flow.
3. Gold Prices: Assess Fear and Opportunity Cost
Gold often attracts attention during uncertainty, but its reputation as a safe haven does not prevent price declines.
Unlike dividend-paying shares or rental property, physical gold produces no income. Your return depends on price movements, with storage and transaction costs also affecting the outcome.
When income-producing assets offer higher yields, holding gold can become less attractive by comparison. Consider its price alongside interest rates and investor sentiment.
4. The US Dollar: Connect Currencies and Commodities
The US dollar matters because major commodities, including oil and gold, are priced in it.
For Australian investors, exchange rate movements can also affect the Australian-dollar value of overseas investments. An overseas asset’s performance and your return after currency conversion may differ.
Watching the dollar helps you understand another source of movement in commodity prices and international holdings.
5. S&P 500 Earnings: Look Beyond Share Prices
Rising share prices tell only part of the story. Earnings growth helps you assess how company performance supports market valuations.
Price-to-earnings ratios provide context, but historical earnings look backwards and forecast earnings depend on estimates.
Watch earnings revisions and how share prices respond. Strong results that attract little buying interest may suggest investors already expected them. Growth spreading across more companies can also indicate broader market participation.
Build a Weekly Review Habit
You do not need to follow every price movement. A weekly review of these five investment charts can help you connect economic changes with your holdings.
Use them together to inform your thinking, rather than treating any single chart as a buy or sell instruction.
