FIG AVENUE INVESTMENTS

Australian economy

GDP growth in the last quarter of 2021 rebounded strongly from the Delta dip, with the Australian economy now having recovered its entire Covid losses. Unemployment has also remained at historic lows, whilst the trade surplus continues to be buoyant¹. This is good news, especially in the face of new threats of inflation and a war in Europe.   

International economy

The US economy has also made up the economic losses suffered in the first half of 2020, with unemployment levels nearing full. This is, of course, one of the drivers of the current jump in inflation, with wages growth remaining well above trend. Much of the rest of the G20 (including Europe, Japan, India and Canada), however, are still playing catch-up on their Covid recoveries.¹ 

Investment Markets

The Australian share market was one of the only developed markets to finish up in the month of February (up about 1%). The invasion of Ukraine has seen US and European bourses take a bigger hit than others (excluding the Russian stock exchange), with these indices falling over 5%².

Outlook

Inflationary fears and the threat of a war between nuclear powers has seen the VIX (volatility index over US shares) jump  considerably over the past few months. These dark clouds look set to continue, coming at a time when the world was set to watch the Covid pandemic disappear in the rearview mirror. Whilst short-term volatility is likely to remain, question marks regarding longer term economic projections might start to cause real concern.

S&P/ASX200 - 12 months to 28 February 2022