RI Advice Monthly Market Update – May 2022

• Global shares had a poor month. Global equities (-3.2% unhedged and -7.4% hedged) significantly underperformed the broader Australian market during April.

• Australian shares produced a small negative return during April, with the S&P/ASX 200 Accumulation Index losing 0.9%. The leading sectors were Utilities (up 9.33%) and Industrials (up 3.44%). I.T. was the worst performer for the month, down 10.37%.

• Fixed income returns for the month were again poor, returning -1.5% domestically and -2.9% globally.

• The Australian dollar took a significant hit during the month of April versus the USD, losing 5.6% of its value. Interestingly, the AUD managed to gain 0.6% against the Yen, but lost 0.8% against the Trade-Weighted Index.

Globally

The U.S. post-pandemic employment recovery continued at a remarkably steady pace in Q1 2022; all jobs lost at the onset of the pandemic are expected to be fully recovered by Q3 2022, according to Fitch Ratings.

The U.S. Labor Department noted that its consumer price index jumped 8.5% in March from 12 months earlier, the largest year-on-year increase since December 1981. Prices have been driven up by bottlenecked supply chains, robust consumer demand and disruptions to global food and energy markets, worsened by Russia’s war against Ukraine.

Locally

Australia’s inflation rate picked up more than expected in the March quarter, with headline inflation surging by 5.1% (headline) year-on-year, and 2.1% over the quarter. It was largest quarterly and annual rises since the introduction of the Goods and Services Tax (GST) in 2000.

The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 0.9% to 95.8 in April from 96.6 in March. This modest decline follows the sharp 4.2% fall in March. Concerns around potential interest rate rises and inflation were starting to weigh on confidence.

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