Market Wrap August 2023
July: More Risk, More Return
- During July, Global Share performance was favourable. Global shares gained 2.1% on an unhedged basis and gained an even better 3.1% on a hedged basis due to an appreciating AUD relative to the USD.
- For July, the U.S. S&P 500 total return index was up 3.11%. Energy stocks advanced on expectations of tighter supply and positive growth data. Certain media and technology giants made strong gains, as did a number of banking stocks.
- Australian shares rose over the month, with the broad market index, the S&P/ASX 200 Accumulation Index, gaining 2.9%. The best-performing sectors were Energy and Financials, which were up 8.8% and 4.9% respectively. Healthcare was the worst-performing sector for the month, losing 1.5%.
- Fixed income returns for the month were mixed, with Australian Fixed Interest gaining a reasonable 0.5%, while global fixed interest lost a very small 0.04%.
- The Australian dollar rose by 1.2% against the U.S. dollar over the month. The U.S. dollar was weaker against its G10 peers. Despite the positive news on U.S. growth, an associated boost to risk sentiment generally benefited higher-yielding and commodity-related currencies, such as Australia.
Australian Services Inflation Up
Globally
- The annual inflation rate in the U.S. increased to 3.2% in July 2023 from 3% in June but below the consensus forecast of 3.3%. It marks a halt in the 12 consecutive months of declines, due to base effects.
- Opposite to the relatively high inflation in the Western world, China's consumer prices dropped by 0.3% year-on-year in July, the first decrease since February 2021, compared to a flat reading in June and market estimates of a 0.4% fall.
Locally
- Australia's inflation rate dropped to 6.0% year-on-year in the second quarter of 2023, down from 7.0% in the previous period and below market forecasts of 6.2%. This marked the lowest figure since the third quarter of 2022, primarily driven by a slowdown in goods inflation (5.8% vs. 7.6% in Q1).
-
In contrast, services inflation accelerated to 6.3%, the highest rate since the introduction of the GST in 2001.
-
Meanwhile, the RBA's Trimmed Mean CPI rose by 5.9% year-on-year, marking the slowest growth rate in a year, but still remaining well above the central bank's target range of 2-3%.
Major asset class performance
|
Asset classes |
1 month % |
1 year % |
5 years (p.a.) % |
|
Australian shares |
2.9 |
11.7 |
7.5 |
|
Australian small companies |
3.5 |
0.8 |
3.2 |
|
Global shares (hedged) |
3.1 |
10.4 |
7.4 |
|
Global shares (unhedged) |
2.1
|
17.6 |
11.4 |
|
Global small companies (unhedged) |
3.6
|
12.4 |
7.3 |
|
Global emerging markets (unhedged) |
4.9 |
12.2 |
3.7 |
|
Global listed property (hedged) |
3.2 |
-9.9 |
-0.1 |
|
Cash |
0.4 |
3.1 |
1.2 |
|
Australian fixed income |
0.5 |
-1.5 |
0.6 |
|
International fixed income |
0.0 |
-3.6 |
0.2 |
Source: FactSet, Lonsec & Insignia Financial, 31 July 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
|
Exchange rates |
At close on 31/07 % |
1 month change % |
1 year change % |
|
USD/AUD |
0.6739 |
1.2 |
-3.4 |
|
Euro/AUD |
0.6112 |
0.2 |
-10.7 |
|
Yen/AUD |
95.74 |
-0.5 | 2.7 |
|
|
Source:
FactSet & Insignia Financial, 31 July 2023
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.
