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RI Advice Monthly Market Update – September 2022



  • Global shares had a poor month (-2.5% unhedged and 3.6% hedged). As expected, unhedged outperformed hedged in a “risk-off” environment, helped by a rising USD versus the AUD.

  • Australian shares produced positive returns for August and outperformed their global counterparts, with the broad market index, the S&P/ASX 200 Accumulation Index gaining 1.2%. The best performing sector was Energy (up 7.42%), followed by Materials (up 3.90%). The worst performing sectors for the month were Property Trusts (down 4.21%), with Consumer Staples being the next worst losing 2.65%.

  • Fixed income returns for the month were again poor, returning -2.5% domestically and -2.7% globally. This was mainly driven by rising bond yields.

  • The Australian dollar took a significant hit during the month of August versus the USD, losing 2.0% of its value. Interestingly, the AUD managed to gain 2.1% against the Yen, and 0.3% against the Trade-Weighted Index.



Globally

US JOLTS (Job Openings and Labor Turnover Survey) data was much stronger than expected at 11.239m versus the consensus of 10.375m. The data suggests there are

no signs yet of a cooling in the labour market with the inference the Fed needs to be more aggressive.


The US economy added 315K payrolls in August of 2022, which was above market forecasts of 300K and pointing to broad-based hiring across many sectors.


Locally

During August, the RBA decided to raise the Target Cash Rate by 0.50% to 1.85%, the fourth consecutive hike (it has subsequently made a fifth increase in early September

of 0.50% to bring the Target Cash Rate to 2.35%).


Australia’s job market continues to remain tight, as the unemployment rate hit a new record low of 3.4% in July, beating expectations by 0.1%.


The Consumer Inflation Expectations reduced again down from 6.3% to 5.9% in August. The Melbourne Institute Index’s recently peaked at 6.7% in June. The easing expectations could reduce some flow on effects to CPI.


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