Cash is King Again
- During September, Global Share performance was poor. Global shares lost 4.0% on an unhedged basis and lost 3.6% on a hedged basis. The difference was mostly due to the appreciation of the AUD versus the Euro.
- For September, the U.S. S&P 500 price index was down 3.7% in local currency. The heavyweight of IT names punished the NASDAQ to the tune of -5.8%. European equities did marginally better as the MSCI Europe was down only 1.3%.
- Australian shares lost ground over the month, with the broad market index, the S&P/ASX 200 Accumulation Index losing 2.8%. The best performing and the only positive return producing sector was the Energy sector, which returned 1.3%. All other sectors were negative, with the worst sector being Property Trusts, down by 8.7%.
- Fixed income returns for the month were also poor, with Australian Fixed Interest losing 1.5%, while global fixed interest lost 1.8%.
- The Australian dollar lost 0.3% against the U.S. dollar over the month. In a similar situation to last month, the U.S. dollar strengthened, benefitting from resilient domestic growth against a weak global backdrop. Markets are still pricing in one more interest rate rise by the Federal Reserve before year-end.
Labour Markets Still Robust
- The inflation rate in the Euro Area declined to 4.3% year-on-year in September 2023, reaching its lowest level since October 2021 and falling below the market consensus of 4.5%, a preliminary estimate showed.
- In a sign of strength from the U.S. economy, the number of job openings rose by 690,000 from the previous month to 9.61 million in August 2023, well above the market consensus of 8.8 million and indicating a robust labour market despite the Fed’s unprecedented monetary policy tightening measures.
- The monthly Consumer Price Index (CPI) indicator in Australia climbed by 5.2% in the year to August 2023, accelerating from a 4.9% gain in July, which was the lowest level in 17 months, matching forecasts. It was the first increase in annual inflation since April, due mainly to faster rises in transport prices (7.4% vs 0.3%), with automotive fuel prices rising the most since November 2022.
- Australia’s unemployment rate stood at 3.7% in August 2023, unchanged from July’s three-month high and matching the market forecast, indicating the labour market is still solid.
Major asset class performance
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.
All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.
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.