Quarterly Market Update June 2024

The last financial year has seen excellent returns for investors, with the Australia market returning 12.1% and international markets up 19.9%. But it has not been a smooth journey, and recently markets seem to be in a holding pattern waiting for economic skies to clear. Around the world asset classes have pulled back in the June quarter, apart from a very narrow rally in a handful of US tech stocks associated with AI applications.

Over the June quarter both the RBA and the Federal Reserve have kept respective interest rates on hold, but the message from the two central banks has been quite different. In the US, inflation continues to fall more in line with expectations, and in their last meeting the Feds confirmed that they expected a single rate cut for 2024 but foresee four reductions instead of three in 2025.

However, when the RBA announced they were keeping rates on hold the message was far more hawkish, and upward revisions to the inflation forecast were greater than anticipated. To cap off the quarter, by the end of June Australia’s inflation had accelerated faster than expected for a third straight month, sending bond yields and the AUD higher as traders increased bets that the RBA will resume raising interest rates at its next meeting.
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