Monthly Economic Wrap

During July:

  • According to the Conference Board, global real GDP is now forecasted to grow by 2.7% in 2023, down from 3.3% in 2022. They expect further slowing to 2.4% in 2024. Economic growth is moderating under the weight of continued high inflation and monetary policy tightening. Rather than a global recession, the Conference Board expects a relatively subdued economic outlook.
  • Rapid monetary policy tightening over the last year or so has led to weakening in global housing, bank lending, and the industrial sector. However, this weakness has been more than offset by strength in other sectors, most notably service-sector activities, which is visible in labour markets.
  • Share market performance was poor for the month of August. The S&P 500 lost 1.8%, while the Australian S&P 200 lost around 1.4% on a price basis.
  • Global shares ex-Australia produced a favourable return of 1.6% on an unhedged basis, but lost 2.2% on a hedged basis.
  • In Australia, Quality and Growth were the best performing styles for the month. Globally, all sectors were negative, with Quality and Momentum being the best performers i.e. least negative. Several of the household-name tech giants experienced a pullback and weighed on the index overall. At the sector level, Consumer Staples companies were generally weaker, as were Financials and Real Estate.
  • Within Fixed income markets, Australian government bonds and credit both produced solid returns this month. The main Australian fixed interest index, the Bloomberg AusBond Composite 0+ Years Index was up 0.7%, while the Bloomberg AusBond Credit 0+ Years Index gained 1.0%.
  • After very good performance last month, Global High Yield bonds, as measured by the Bloomberg Barclays Global High Yield Total Return Index Hedged into AUD lost 0.3% this month.

Read more in the Monthly Economic Wrap here.


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