Unfortunately for investors, the September quarter ended on a low point with both Australian and International Shares giving back the gains achieved in July and August. Sharemarkets have continued to fall in October on the back of continued inflation woes as well as the ongoing conflict in the Middle East.
Over the last three months, the Australian share market has dropped 7.78% at the time of writing.
ASX200 returns – 3 months to 27 October 2023
Despite the recent falls, both Australian Shares and International Shares have had a positive 12 months. Since 1 October 2022 the ASX200 has risen from 6,485 points to now sit at 6,828 points (27th October).
The US sharemarket (S&P500) has performed even better over the previous 12 months moving from 3,609 points 12 months ago to sit at 4,232 today (market close 26th October). This is a gain of over 17%.
Market update as at 30 September:
Below are the key points for the month and quarter ending 30 September:
- The RBA chose not to lift rates at the September meeting, Philip Lowe’s last meeting as governor, although he noted the possibility of further tightening should inflation remain high. New RBA Governor Michelle Bullock shared that sentiment around inflation at the October meeting but left rates on hold at 4.10%.
- The Australian equity market lost 2.8 per cent in the month, and -0.8 per cent for the quarter. For the quarter, the bank sector managed to rise 4.4 per cent while energy was up more than 11 per cent.. However, Listed Property, materials and IT were all softer.
- Global equity markets declined 4 per cent in September, taking the September quarter loss to 0.4 per cent following a strong first half of 2023.
- Global and Australian bond yields surged in September on the back of a better-than-expected economy at this point of the rate hike cycle.
Sharemarket returns will continue to be heavily influenced by inflation numbers and the actions taken by central banks to get inflation under control. In Australia, economists are predicting one more interest rate rise in the future and the current rhetoric on interest rates is that they will also stay higher for longer. Whilst this can be bad news for borrowers, as investors a higher interest rate should mean the defensive portion of portfolios can provide a buffer against continued sharemarket volatility.