Economic & Market Update October 2023

File: Economic & Market Update

Duration: 03:08

Date: October 12, 2023

00:01 Economic Review October 2023

00:04 A range of factors affected international investment markets negatively in September, ranging from new economic data, geopolitical tensions & commodity prices.

00:12 In key economic data, the U.S. Unemployment Rate fell to 4.8% in September 2023 and 194,000 jobs added in September 2023, showing the strength of the job market, stoking inflation fears.

00:21 Core PCE Price Index: Rose by 0.2% month-over-month in August 2023, aligning with market expectations.

00:29 Many companies reported their Q3 earnings in September, disappointing investors and impacting market sentiments and share performance.

00:37 Geopolitical Developments continue to create volatility, with U.S.-China Relations ongoing tensions unsettling global markets. While elsewhere various geopolitical issues around the globe also played a significant role in market dynamics.

00:46 Most notably the escalating violence in the Russia/Ukraine conflict.

00:53 The US Federal Reserve's decisions and comments on tapering and interest rates were closely watched by investors, affecting market sentiment and share performance.

01:02 Bond yields reached new highs as markets outlook on government debt around the world worsens.

01:09 Lastly, with commodity prices like oil and food again on the rise significantly, impacting the energy sector and broader market dynamics and further stoking inflation expectations, and in turn interest rates.

01:19 The Australian share market had a terrible month, losing -2.84% for the month, but positive over the last year, with a return of 13.46%, coming off a low base.

01:26 This was in contrast to global developed markets, which saw International Shares rise 1.65% for the month, contributing to an annual performance of 23.27%.

01:33 The strong international sharemarket performance over the last 12 continues to benefit from the low 12 months ago and the concentrated effect of few technology stocks across global markets. However recent market weakness is showing signs as even these stocks begin to fall.

01:51 The monthly Consumer Price Index (CPI) indicator rose 5.2% in the twelve months to August, according to the latest data from the Australian Bureau of Statistics (ABS).

01:59 Michelle Marquardt, ABS head of prices statistics, said: "This month’s annual increase of 5.2 per cent is up from 4.9 per cent in July. Annual inflation remains below the peak of 8.4 per cent in December 2022.”

02:10 “CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation.”

02:20 “When excluding these volatile items from the monthly CPI indicator, the annual rise of 5.5 per cent in August is lower than the annual rise of 5.8 per cent in July,” Ms Marquardt said.

02:36 The Australian Dollar fluctuated up and down for the month in a range of 1.75%, finishing the month up at 0.6428 USD, a monthly decrease of only 0.55. US cents.

02:43 Consumer confidence dropped slightly in September, moving from 78.1 to 76.4 points. With the index remaining below 80 points for over 30 weeks, continuing the longest stretch at this level since the 1990-91 Recession.

02:51 Australia's seasonally adjusted unemployment stood at 3.7% in August 2023, unchanged from July's three-month high and matching the market forecast.

02:58 The participation rate edged up to 67% from 66.9%, reaching an all-time high.