Market Wrap November

October: Developed Market Equities Rebound

• Global shares performed well over October (7.8% unhedged and 7.2% hedged). Energy stocks were broadly stronger following especially robust earnings.
• Australian shares also performed well, with the broad market index, the S&P/ASX 200 Accumulation Index gaining 6.0%, with all sectors producing positive returns except for Consumer Staples and Materials, both of which were only slightly negative. The best performing sectors were Financials (up 12.16%), followed by Property Trusts (up 9.91%).
• Fixed income returns for the month were mixed, with Australian Fixed Interest returning 0.9%, whereas global fixed interest went backwards 0.1%.
• The Australian dollar was flat against the US dollar for the month, while the AUD rose 2.7% against the Yen. On a Trade-Weighted Index basis, the AUD was down 0.3%.

Economic Growth Slows

Globally

• Private sector firms in the US recorded a further downturn in output at the start of the fourth quarter, according to latest ‘flash’ PMI data from S&P Global. The fall in business activity was larger than that seen in September, as service providers signalled a quicker decline.
• The Eurozone economy slipped into a steeper downturn at the start of the fourth quarter, the rate of decline hitting the fastest since April 2013 excluding pandemic lockdowns. Manufacturing and energy intensive sectors, in particular, reported the steepest output loss, but services activity also continued to fall at an accelerating rate amid the ongoing cost of living crisis and broad-based economic uncertainty.

Locally

• During October, the RBA decided to raise the Target Cash Rate by 0.25% to 2.60%, the sixth consecutive hike (it has subsequently made a seventh increase in early November of 0.25% to bring the Target Cash Rate to 2.85%).
• The annual inflation rate in Australia climbed to 7.3% in Q3 of 2022, up from 6.1% in Q2, and above market forecasts of 7.0%. This was the highest figure since Q2 1990, boosted by higher prices for new dwelling construction, automotive fuel and food. On a quarterly basis, consumer prices went up 1.8%, the same pace as in Q2, which remained the steepest pace since the introduction of the Goods and Services Tax (GST).