Investment market update

Broadcast news April 24

An update from Brett Chatfield, Chief Investment Officer

Brett 716x302

Inflation finally coming down

Investment markets have experienced a strong recovery in recent months in response to signs that inflation may finally be falling back towards central bank target levels. This has improved the economic outlook and markets are now factoring in a higher likelihood that central banks will start to lower interest rates in 2024.

United States leads the way

This market move was led by the United States (US) where share markets and fixed income markets performed strongly following weaker than expected inflation data in November. Many investors are now expecting the US Federal Reserve to lower interest rates in the first half of this year.

Australia making progress

Australian inflation is also slowing, but not as quickly as in the US. The Reserve Bank of Australia (RBA) raised interest rates by another 0.25% in November but kept interest rates on hold following its December meeting.

Encouragingly, the RBA’s recent public statements suggest it is now assessing the economic impact of current interest rate levels and considering whether further tightening is required. This has raised expectations that Australian interest rates may also fall in 2024, but probably not until later in the year.

Looking forward

Whilst investor sentiment has been quite buoyant, the outlook for markets in Australia and overseas continues to hold some uncertainties. Inflation is not yet beaten, the expected size and timing of interest rate cuts may change in response to new economic data, and several geo-political conflicts are continuing to affect markets with potential implications for the global economy.

Against this backdrop, our portfolios remain well diversified and are designed to withstand periods of market volatility. It is important to remember that super is designed to be a long-term investment, and our Growth (MySuper) investment option reflects this, outperforming the median fund over 5 and 10 years.

* The median investment option return is taken from the SuperRatings FCRS SR50 Balanced (60-76) Index (January 2024). The default Growth (MySuper) investment option performance ranking was above the median return over 5 and 10 years for the period ending 31 January 2024. SuperRatings is a ratings agency that collects information from super funds to enable performance comparisons – visit Past performance is not a reliable indicator of future performance.

Performance is as at 31 January 2024. The return for the Growth (MySuper) investment option is based on the crediting rate, which is returns minus investment fees, taxes and until 31 January 2020, the percentage-based administration fee. Excludes fees and costs that are deducted directly from members’ accounts. Past performance is not a reliable indicator of future performance.

The historical performance prior to this relates to Cbus’ investment options and does not incorporate the performance of Media Super investment options before April 2022.