For a second month, Australian equities only slightly increased, as the worse than expected inflation data released in June now has investors holding out until the official quarterly CPI figure which is released on July 31 and incorporates all areas of inflation and not the two thirds represented in the monthly data. Depending on these results, all eyes will then be on the RBA’s decision in August and whether they increase the cash rate. Despite the higher rates for longer theme re-emerging, investors are remaining optimistic for the time being, as they have only been reacting to the very short term data. This will likely change if the RBA is forced to increase rates again.

The Australian 10-year government bond yield decreased to 4.35% by the end of June and with speculation on the next interest rate move, it coincidentally sits in line with the RBA cash rate. High yielding corporate debt continues to not provide sufficient return for the risk being taken . Cash continue to remain the preference with rates providing greater return than bonds at a lower risk then high-yield.

It was a mixed bag in global equities throughout June again as US equities continue to push the all-time high further, despite the chances of a soft landing slightly decreasing as inflation (particularly services inflation) continues to remain sticky. Despite a preference with investors of holding the large, developed equities; emerging markets were the strongest performer for the month as momentum in riskier assets has been building in an effort to find investments with reasonable valuations.

With the European central banks reducing the cash rate, and elections pointing towards big political shifts; the equity markets in Europe were the worst geographical performer. It will likely continue to be hard for European equities to outperform in the short-term as other developed countries look to hold interest rates. After 4 months of gains, China also slipped in June as the economy continues to show signs of weakness and the government being hesitant to stimulate too much until the property market is more sturdy. With Biden’s poor performance in the first US debate increasing Trump’s chances of being elected, this will also bode poorly for Chinese equities.  

Altitude Financial Planning is a Corporate Authorised Representative of Altitude Financial Advisers Pty Ltd
ABN 95 617 419 959 
AFSL 496178

The information contained on this website is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Document.