FIG AVENUE INVESTMENTS

Australian economy

At the start of April, the RBA gave mortgage holders a little reprieve, pausing interest rate hikes for the month. The inflation reading at the end of the month, however, highlighted that there was probably more work that needed to be done in order to bring down the rate of inflation to a more manageable level¹. 

International economy

A big drop in business spending has seen the US economy slowing more quickly than many had anticipated. Whilst this is just the one quarter's reading, this has led to growing fears of an impending US and global recession. This is yet to be reflected in the jobs market, where it seems as though employers are keen to hold onto workers and cut costs elsewhere. Across the Pacific and it was better news for the world's 2nd biggest economy , with GDP growth for the most recent quarter coming in at health 2.2% (4.4% YoY)¹. 

Investment Markets

Most of the world's equity markets saw a relatively quiet April, with the low level of the VIX index over US stocks (volatility index) highlighting relative calmness. Despite a couple of hiccups, equities are up around 3-5% in most markets around the world over the start to 2023 with the one of best performers over this time being Japanese stocks (up over 15%)². 

Outlook

Whilst recessionary fears continue to grow, there doesn't seem to be a real answer to the high inflation that doesn't go through interest rates. Governments seem to not want to tighten spending or increase taxes and so it is largely up to central banks to make the hard decisions. It is yet to be seen whether monetary policy will be able to constrict consumption enough to reduce inflation, but not enough to see economic activity crash.

S&P/ASX200 - 12 months to 30 April 2023