Market Wrap December 2023

November: Solid Rebound

• After a poor month for nearly all investments in October, returns during November were exceptional strong.
• During November, Global Share performance, especially on a hedged basis was great. Global shares gained 4.4% on an unhedged basis, and gained a stellar 8.0% on a hedged basis.
• For November, the U.S. S&P 500 price index was up 8.9% in local currency. Global shares rocketed in November as traders started to bet on a Goldilocks scenario of inflation falling and central banks lowering interest rates.
• Australian shares also gained ground over the month, with the broad market index, the S&P/ASX 200 Accumulation Index gaining 5.0%. The best performing styles for the month were Growth and Small Caps. The best performing sector was Health Care returning 11.7%, while the worst performing sectors were Energy and Utilities, down by 7.4% and 6.0% respectively.
• Fixed income had a very strong month, with Australian Fixed Interest gaining 3.0%, while global fixed interest gained 3.2%.
• The Australian dollar gained a very solid 4.7% against the

• U.S. dollar over the month. The most recent rally in the AUD/USD has been driven by elevated commodity prices, positive risk sentiment, and a hawkish RBA, amid a weakening U.S. dollar facing pressure from the Fed's dovish pivot and anticipated 1.25% of rate cuts expected next year.

Globally

• The annual inflation rate in the U.S. slowed to 3.2% in October 2023 from 3.7% in both September and August, and below market forecasts of 3.3%. Energy costs dropped 4.5% (vs -0.5% in September), with gasoline declining 5.3%, utility (piped) gas service falling 15.8% and fuel oil sinking 21.4%.
• The inflation rate in the Euro Area declined to 2.4% year-on- year in November 2023, reaching its lowest level since July 2021 and falling below the market consensus of 2.7%.

Locally

• The monthly Consumer Price Index (CPI) indicator in Australia increased by 4.9% in the year to October 2023, slowing from September’s five-month-high of 5.6%, below forecasts of 5.2%. It was the first decline in annual inflation and the slowest pace since July.
• As largely expected, the RBA kept the official cash rate at 4.35% at its December meeting.