FIG AVENUE INVESTMENTS

Australian economy

A good jump in the number of employed persons, despite a similar jump in the unemployment rate, exemplifies this current period of high immigration. The RBA has paused interest rate hikes at the moment, opting for a 'wait-and-see' approach (or maybe passing the inflation problem onto the new governor)¹. 

International economy

Rising oil prices have contributed to a short-term increase in the US inflation rate, halting their steady decline back to the inflate rate target band of 2-3%. With a similar story to Australia, immigration and labour force re-entrants have caused the unemployment rate to tick-up in the US, with the labour market starting to loosen up¹. 

Investment Markets

The Australian share market had a rough month of August, down around 4% at one stage before improving to finish the month 1.5% off. European stocks fared worse, down almost 4% for the month, while US equities were able to eke out a slight gain. After a great July, Chinese stocks were amongst the worst performing in August, down over 6%². 

Outlook

Whilst central banks are almost done with the current rate hiking cycle, hope for a sustained reversal are diminishing (except maybe in the US), medium and long-term yield rises indicative of growing expectations for higher rates for longer (or perhaps, a reestablishment of 'normal' interest rate policy).

S&P/ASX200 - 12 months to 31 August 2023