FIG AVENUE INVESTMENTS

Australian economy

Unemployment in Australia fell once again over the past month, falling to an all-time low of 3.5%. This, however, has not been overly reflected in wages, with the nation's workers seeing only moderate increases to pay despite the tight labour market. This is a further surprise given the high levels of inflation with the Australian economy somewhat resembling conditions prior to its last major recession in the early 90s¹. 

International economy

Despite the US economy seemingly slipping into a technical recession in the first half of 2022, President Biden has rejected the notion of a faltering economy pointing to very low level of unemployment. The prospect of excessively high inflation in the US, however, is still a major concern albeit being countered by record levels of wages growth. Inflation is at multi-decade highs in all corners of the world, fuelled by a tripling of natural gas prices over the recent past¹. 

Investment Markets

July provided investors with a bounceback from reasonably sharp falls in the first half of 2022. US markets led the way, up almost 10% for the month, whilst most other markets were up over 5%. Chinese equities saw major falls however, off over 7% for the month. Bond investors also got some reprieve with long-term yields moderating back down after hitting decade-long highs in mid-June².

Outlook

There are some signs that the recent jump in prices is set to moderate, with oil prices especially, moderating down about 20% from recent highs. Energy prices, however, are likely to remain under threat with the northern hemisphere approaching winter and the conflict in Ukraine heading towards a slow war of attrition.

S&P/ASX200 - 12 months to 31 July 2022