FIG AVENUE INVESTMENTS

Australian economy

The latest GDP data came in a little below expectations but were in still in line with a country that is growing slightly above trend. And whilst the unemployment rate ticked up slightly, this was accompanied by a growing rate of labour force participation¹. 

International economy

September's US inflation data gave some hope that price rises in the US have peaked. But with job vacancies starting to drop and jobless claims also bottoming out, there is very little room for error for the Fed if they want to avoid a period of stagflation¹. The other big concern for global investors, of course, is the ongoing conflict in Ukraine with the Russian annexation four new territories leading to an escalation of the conflict.

Investment Markets

Over the past 10 years, the USD has appreciated consistently whilst US shares have outperformed all other markets. This has meant that the average global investor might have earned around 10% p.a. more by investing in US shares than in their own markets. Whilst the last 9 months haven't been so kind for those in US shares (e.g. US shares have fallen by over 10% more than markets like Australia), there continues to be signs of money flowing back into the US safe haven².

Outlook

Whilst the RBA surprised with a more dovish hike in October, all eyes will continue to be on inflation to see how much room they might have to work with in regards to future interest rate hikes. The final countdown to US midterms has also come, though economic policy settings are not likely to be influenced by the outcome.

S&P/ASX200 - 12 months to 30 September 2022