September: All except cash down
- Global shares had a poor month (-3.2% unhedged and – 8.9% hedged). Similar to last month, unhedged outperformed hedged due in part to a continuing “risk-off” environment, and a strong USD versus the AUD.
- Australian shares lost ground during September, with the broad market index, the S&P/ASX 200 Accumulation Index losing 6.2%, with all sectors producing negative results for the month. The best-performing sector was Healthcare (down 5.05%), followed by Consumer Staples (down 5.81%). The worst performing sectors for the month were Utilities (down 14.87%), with Property Trusts being the next worst losing 13.75%.
- Fixed income returns for the month were again poor, returning -1.4% domestically and -3.5% globally. This was again mainly driven by rising bond yields.
- The Australian dollar took a significant hit during the month of September versus the USD, losing 6.5% of its value. The AUD also declined against the Yen (down 2.6%), and lost 2.8% against the Trade-Weighted Index.
Recession likelihood increasing, but employment still solid
- The U.S. unemployment rate fell to 3.5% in September 2022, matching July’s 29-month low and remaining below market expectations of 3.7%. This is a clear sign that overall labour market conditions in the U.S. remain tight.
- The unemployment rate in the Euro Area was unchanged at 6.6% for a second consecutive month in August of 2022, a record low reading and in line with market forecasts. A year earlier, the jobless rate was much higher at 7.5%.
- During September, the RBA decided to raise the Target Cash Rate by 0.50% to 2.35%, the fifth consecutive hike (it has subsequently made a sixth increase in early October of 0.25% to bring the Target Cash Rate to 2.60%).
- Australia’s Melbourne Institute Inflation Gauge pointed to a 0.5% rise in prices in September 2022 compared to the previous month, rebounding from a 0.5% decline in August and highlighting broad-based ongoing inflationary pressure with high prices observed for a wide range of goods and services.
Major asset class performance
Source: Bloomberg & IOOF, 30 September 2022
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD. Please note: Past performance is not indicative of future performance.
Source: Bloomberg & IOOF, 30 September 2022
All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.
For specific advice customised to your individual circumstances, contact Carrick Aland’s award-winning Wealth Planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
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