Economic & Market Update November 2023

File: Economic & Market Update

Duration: 03:28

Date: November 15, 2023

00:01 Economic Review November 2023

00:04 The beginning of October was dominated by the geopolitical implications of the surprise Hamas terrorist attack in Israel, sending shocks throughout global financial markets.

00:14 However, concerns continue to still focus on the risks to global growth from the likelihood of persistently high inflation around the world.

00:22 The International Monetary Fund released their Global Financial Stability Report, highlighting inflation’s elevated risks to economies globally, combined with the growing disruptions to commodities markets.

00:30 October 2023 saw significant shifts in financial markets. Long-term US Treasury securities experienced a sharp price drop, with 10-year note yields approaching 5%.

00:39 Equity markets also saw declines, briefly entering ‘correction’ territory, or a fall of over 10% from recent highs.

00:47 These movements were influenced by a mix of already mentioned factors; including inflation, US Federal Reserve policies, rising US federal budget deficits, and geopolitical tensions.

00:55 A combination of these global factors, and local issues around key iron ore prices and weak forward guidance from the financial services sector, led the Australian market to also suffer a poor month.

01:03 The Australian share market had a terrible month in October, losing -3.78% for the month,

01:11 However still managing a positive return over the last year, growing 2.95% over 12 months, coming off a low base.

01:20 This was in line to global developed markets, which saw International Shares drop -0.95% for the month, detracting from an annual performance of 12.31%.

01:28 International Shares continue to be dominated by ‘Mega Cap’ tech stocks, dubbed the ‘Magnificent Seven’. Namely, Microsoft, Amazon, Meta (Facebook), Apple, Alphabet (Google), Nvidia & Tesla.

01:36 This can be seen in the relative performance of the S&P 500 Equal Weight Index, which returned -4.08% for October and -0.72% over 12 months.

01:55 The Consumer Price Index (CPI) rose 1.2 per cent in the September 2023 quarter and 5.4 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).

02:02 Michelle Marquardt, ABS head of prices statistics, said “CPI rose 1.2 per cent in the September quarter, higher than the 0.8 per cent rise in the June 2023 quarter. The rise this quarter however continued to be lower than those seen throughout 2022.

02:10 “The most significant contributors to the rise were new dwellings (+4.9 per cent), automotive fuel (+19.7 per cent), rents (+7.6 per cent) and tobacco (+7.5 per cent).

02:18 “This is the second consecutive rise in the annual movement up from 5.2 per cent in August and 4.9 per cent in July.

02:28 While many industries price increases are slowing, automotive fuel has had large annual increases in the last two months, which has been driving the movement higher,” Ms Marquardt said.

02:47 The Australian Dollar fluctuated up and down for the month in a range of 2.26%, finishing the month up at 0.6337 USD, a monthly decrease of only 0.91. US cents.

02:55 Consumer confidence dropped slightly in October, moving from 76.4 to 75.0 points. With the index remaining below 80 points for over 34 weeks, continuing the longest stretch at this level since the 1990-91 Recession.

03:04 Australia's seasonally adjusted unemployment unexpectedly was at a three-month low of 3.6% in September 2023, easing slightly from August's figure and falling below market consensus of 3.7%.

03:14 The participation rate went down to 66.7% from last month's record high of 67%.