FIG AVENUE INVESTMENTS

Australian economy

Australia's economic hit from the delta variant was confirmed with data showing a fall in GDP in the September quarter by 1.9%. This was accompanied by a jump in the unemployment rate back above 5% and at a time when inflation is a little high for comfort. Our large trade surplus continues to be the main point of optimism for the Australian economy, but tis has started to retreat from recent highs¹.   

International economy

Supply and worker shortages have continued to put plenty of pressure on consumer prices in the US. Wages have been growing at almost 10% p.a. while inflation is running at rate more than double the target level. Economic growth is also slowing even with a combination of ultra-loose macroeconomic policy. While not as high, Europe has also started to fill the pinch of higher prices, but economic growth has remained above trend for now¹.

Investment Markets

It was a tough month for equity markets with all of the major bourses falling. Europe and the Far East were the worst hit, with the Hang Seng down by over 7%. Aussie and US equities fared a little better, both down by about 1%².

Outlook

With inflation remaining stubbornly high, the market is trying to figure out what 21st century stagflation will look like and whether it will impact share prices. Overall, however, it seems as though such risks are largely being shrugged off, with most markets remaining near all-time highs.

S&P/ASX200 - 12 months to 30 November 2021