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Markets Unwrapped: January 2024

Article By Jamie Eames | | Financial Planning

The first month of the year saw the majority of markets only slightly increase. This is to be expected as markets around the world are now nearing all-time highs, from the excellent performance to end last year. Although it was anticipated that the RBA would hold rates during their first meeting, Michele Bullock’s comments around treading carefully should help to narrow the distance between the optimistic expectations and reality as to when rate cuts will occur.

As we enter earnings season domestically, we look to see investors put more emphasis on current fundamentals of businesses, opposed to news, politics, etc. We expect natural volatility to occur as companies announce under/over guidance, however hopeful that this will help to tame the current bull run.

The Australian 10-year government bond rate continues to be under the RBA cash rate, however increased to 4.07%. Although a slight increase, extreme caution is still needed as bond yields being under the cash rate for an extended period doesn’t have a great historical track record. With the Fed hardening their stance on holding cash rates and not cutting too early, the Australian dollar slipped slightly against the USD.  

The Hang Seng continues to be hurt from the struggling property market, low exports and a continued distrust in the government. With developed markets at or nearing all-time highs, investors have been little inclined to invest elsewhere.   

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