Monthly Economic Wrap – March 2023

This month:

  • The Conference Board reports that the global economy is so far weathering headwinds better than expected. Incoming activity data for the fourth quarter of 2022 beat expectations, even though they do point to continued slowing momentum.
  • Global real GDP is forecasted to grow by 2.3% in 2023 according to the Conference Board, down from 3.3% in 2022. Most of the weakness is expected to be concentrated in Europe, Latin America and the U.S., though it is weighing on the industrial sector globally.
  • Asian economies are expected to drive most of global growth in 2023, as they benefit from ongoing reopening dynamics and less intense inflationary pressures compared to other regions.
  • Both the S&P 500 and the S&P ASX 200 performed poorly during February. The S&P 500 fell by 2.61% for the month, while the Australian S&P 200 fell by 2.92%.
  • In Australia, Growth and Quality were the best performing styles for February, and were the only styles to produce a positive return for the month. Globally, Growth was the best performer, followed by Small Caps, with Equal Weight being the only style in negative territory.
  • Within Fixed income markets, both government bonds and credit lost some ground this month. For February, the main Australian fixed interest index, the Bloomberg AusBond Composite 0+ Years Index lost 1.3%, while the Bloomberg AusBond Credit 0+ Years Index lost 0.6%.
  • Global High Yield bonds, as measured by the Bloomberg Barclays Global High Yield Total Return Index Hedged into AUD lost 1.6% for February, but are still up so far this year after excellent returns in January.
  • Given the whole Australian Government yield curve is now higher than it was one month ago, composite Australian Fixed Interest funds are now looking somewhat more attractive, relative to credit.

Read the full Monthly Economic Wrap prepared by IOOF Research here.


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