April: All Asset Classes Up
- During April, Global Share performance was solid. Global shares gained 1.6% on a currency hedged basis, but gained an even more impressive 4.5% on an unhedged basis, due to a depreciating AUD relative to the USD.
- In the U.S., equity market performance was influenced by gains from some of the index’s largest companies, including some of the large tech stocks. Industrial and consumer discretionary stocks weighed, with automobiles notably weaker. Tesla shares fell as its results showed that profits had been hurt by increasing competition in the global electric vehicles market.
- Australian shares rose during April, with the broad market index, the S&P/ASX 200 Accumulation Index gaining 2.6%. The best-performing sectors were Property Trust and Information Technology. Materials was the only sector to produce a negative return for the month, losing 2.6%.
- Fixed income returns for the month were modest, with Australian Fixed Interest gaining 0.5%, and global fixed interest gaining 0.7%.
- The Australian dollar fell by 1.3% against the U.S. dollar over the month, mainly due to the RBA not raising rates in early April and then stronger than expected retail sales figures in the U.S. mid-month strengthened the USD. Late in the month, Australian Trimmed Mean CPI came in lower than expected and markets priced out a May RBA rate hike, which subsequently proved incorrect. Against the Yen, the AUD was higher, gaining 1.0%.
Interest Rates Up, Inflation Down
Globally
- The annual inflation rate in the U.S. fell to 4.9% in April 2023, the lowest since April 2021, and below market forecasts of 5%. Food prices grew at a slower rate (7.7% vs 8.5% in March), while energy costs fell further (-5.1% vs -6.4%) including gasoline (-12.2%) and fuel oil (-20.2%). Also, shelter cost that accounts for over 30% of the total CPI basket, slowed for the first time in two years.
- The Federal Reserve raised the fed funds rate by 0.25% to a range of 5%-5.25% during its early May meeting, marking the 10th increase and bringing borrowing costs to their highest level since September 2007. The decision came in line with market expectations.
Locally
- While the RBA held rates steady at 3.60% at their April meeting, the RBA again increased the cash rate target by 0.25% to 3.85% on 2 May, which is now an accumulated increase of 3.75% in one year.
Major asset class performance
Source: FactSet, Lonsec & Insignia Financial, 30 April 2023. 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.
Currency markets
Source: FactSet & Insignia Financial, 30 April 2023. 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/.
This document is prepared by Actuate Alliance Services Pty Ltd (ABN 40 083 233 925, AFSL 240959) (‘Actuate’), a member of the Insignia Financial group of companies (‘Insignia Financial Group’). General Advice Disclaimer: The information in this report is general advice only and does not consider the financial objectives, financial situation or needs of any particular investor. Before acting on this report, you should assess your own circumstances or seek personal advice from a licensed financial adviser. This report is current as at the date of issue but may be subject to change or be superseded by future publications. The content is current as at the date of issue and may be subject to change. If an investor requires access to other research reports, they should ask their adviser. In some cases, the information has been provided to us by third parties. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted by Actuate or any member of the Insignia Financial group, nor their agents or employees for any errors or omissions in this report, and/or losses or liabilities arising from any reliance on this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Actuate.
