Australian equities were volatile throughout April, reacting to any and every piece of information announced. The market fell notably in the middle of the month due to US inflation increasing, furthering investor fears inflation would also not reduce as expected in Australia. This then results in any potential interest rate cuts being pushed further out. Prior to the dip, the market reached near all-time highs; and despite the volatility, with a rally in iron-ore prices and new falling inflation data (late April/early May), further market rallies may continue. As seen during April, a key catalyst for Australian equity movements is the performance of the US economy. We will be looking closely at this weeks Federal budget as this may help light the scene for investors going forward.
The Australian 10-year government bond yield increased to 4.53% by the end of April and after 4 months, now sits above the RBA cash rate. The property market has hit a slight hiccup, as the RBA and the Fed reconfirmed it’s higher for longer stance on interest rates for a second month. This led to both Australian and Global listed property being the worst performers in April, as any increase to profit has been pushed back.
It was a mixed bag in global equities throughout April. The Federal Reserve held rates on the back of an increase to inflation, which saw US equities perform the worst out of developed equity markets. European equity markets remain resilient through the current weakness in the economy, despite being flat through April they continue to remain at all-time highs.
The outperformer in global equities through April was China. Although China’s GDP is suggesting the economy may be weak, company valuations remain low, interest rates have been lowering and the economy is able to benefit from quantitative easing and fiscal stimulus. Following its poor performance over 2023, the Chinese market has rallied and is up almost 25% since the middle of January.
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