February 2023 - Market Insights

Market Insights

We were joined by Cam & Chris from BetaShares.

Who share their market insights, discussing the state of the current economy, provide the outlook for:

  • inflation

  • share profit margins

  • outlook for share market

  • rate hikes

  • property prices

  • and we take a look at the current econmy

With inflation still way too high, we are likely to see ups and downs on investment markets. However there is reason for optimisim:

  • Inflationary pressures look to have peaked, so inflation could fall faster than expected (although unlikely at this stage)

  • Interest rates are likely at or nearing their peak, with another increase in February & March predicted, before we possibly see rate cuts here in Australia in late 2023/ early 2024.

  • While the risk of recession is very high, it may not turn out as bad as feared.

  • In the US it may just be a sharp slowdown or mild recession

  • Europe has moved away from Russian gas very quickly and providing its winter is mild, may continue to hold up better than feared (we are seeing glimpses now)

  • After initial covid-related setbacks, Chinese growth is likely to rebound as it reopens

  • Australian growth is likely to slow but avoid recession, reflecting the less aggressive RBA and strong business investment outlook.

  • Australian home prices are likely to fall further as rate hikes continue to impact, resulting in an overall fall of 15-20%, but with prices expected to bottom around the September quarter, ahead of gains late in the year as the RBA moves toward rate cuts.

However, there still remains several risks to keep an eye on over the course of 2023:

  • An escalation of the Ukraine conflict could impact Europe

  • US politics - the return of divided government risks market volatility

  • China - increased tension around Taiwan

  • Australian home prices - a sharper than expected fall as fixed rates reset to variable (the mortgage cliff), coupled with unemployment rising, could cause financial instability.

  • Inflation - if it continues to rise, central banks could raise rates further, risking deep recession.

Should you have any thoughts, feedback or questions, please speak with our Newcastle Financial Planners whom will be able to support you.

BetaShares is an investment management company.

With more than $25 billion under management and the broadest range of ETFs on the market, Betashares currently serves over 800,000 investors.

Matthew McCabe