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Australian economy

Australia is one of only a handful of countries to be sporting a budget surplus, its first since the global financial crisis. Strong exports and low employment is to thank for the result. Business and consumer confidence, however, is pointing towards a tough time ahead, with concerns over persistent inflation keeping an otherwise string economy in check¹. 

International economy

The labour market in the US remains tight, but strong, with the level of employment remaining high. While US inflation remains above comfort levels, it has come down considerably from its highs. Across the Pacific, the world's second business economy is still trying to recover from the pandemic, with international turmoil threatening to constrain intermediate growth¹. 

Investment Markets

It was a cold September for most of the world's equity markets with US shares leading the way with falls of almost 5%. Australian equities were not far behind with the ASX200 falling about 3.5% in the month. Long term bond yields have continued to push upwards with 10-year US treasuries pushing back up to pre-GFC levels². 

Outlook

Further and significant flashpoints (Armenia, Gaza) have escalated into bloody conflicts with the pandemic aftermath continuing to wreak havoc on the geopolitical landscape. Tensions are also boiling over in other arenas (e.g. Kosovo, sub-Saharan Africa) and it might not be long before the likes of Europe or the US might be forced into war. Market participants might likely find it difficult to navigate the impending uncertainty.

S&P/ASX200 - 12 months to 30 September 2023