Market Update – financial markets still flat
In markets this week
Markets flat as volatility eases
Financial markets stayed flat this week, with the ASX300 down 0.24% and All Country World Index (ACWI) down 1.50%.
Despite this, the risk of rising interest rates has put technology stocks under pressure, and the NASDAQ index was down 4% for the week.
Spirit Super investment options stable
Our investment options have stabilised as market volatility eases across financial markets in recent weeks.
The 10-year US Treasury bond yield rose on Friday for the sixth consecutive trading session, climbing to 2.71% from 2.38% at the end of the previous week. This is the highest value of the 10-year yield in three years.
When bond yields increase, the value of fixed-income assets falls, negatively affecting investment options that have exposure to fixed-income assets.
Oil prices fall again
US crude oil prices fell for the second week, slipping below the $100-per-barrel level on Tuesday and ending the week around $98. Despite the recent pullback, the price remained about 30% above its level at the end of 2021.
Interest rates likely to rise
The Reserve Bank of Australia (RBA) decided to keep interest rates on hold last week. Equity markets responded negatively and declined immediately after the announcement.
Despite this, the RBA's decision was not unexpected as markets had only priced in a 30% chance of an April rate increase before the announcement.
Interestingly, the RBA retired its use of the word "patient" to describe its monetary position, which could mean interest rate rises are on the horizon.
Markets expect the RBA will need to increase interest rates throughout the year, with futures prices suggesting the cash rate will exceed 2% by the end of 2022 (up from its current level of 0.10%).
The US Federal Reserve has already begun increasing its interest rates, with a 0.25% rate hike at its March meeting. It’s anticipated it will need to hike rates many more times across the next year to keep inflation under control.
Inflation data released this week showed US prices climbed at their highest rates since 1981, rising 8.5% over the year to the end of March. Increasing wage costs and the impact of the war in Ukraine on energy prices have had a significant impact on inflation.
We continue to monitor developments
Despite volatility easing, we continue to monitor economic data, including interest rates and inflation, and pro-actively reposition our portfolio before large market movements.
We also continue to monitor economic news and reposition asset allocations dynamically to reflect the medium-term changes in fundamentals.
This ensures we are safeguarding the long-term value of your super.
Need advice about your investment options?
Being in the right investment option at the right time can make a huge difference to your super’s overall performance.
If you're thinking about switching investment options or are unsure which option is best for you, please get in touch.
You can also book a one-on-one chat with one of our expert Superannuation Advisers. They can offer helpful, straightforward advice to ensure your super is working for your situation.
This service comes at no additional cost – it's part of being a Spirit Super member.
To get in touch or book an appointment, call 1800 005 166 or submit an online enquiry.
1 Past performance isn’t a reliable indicator of future performance. The value of investments can rise or fall, and investment returns can be positive or negative.
This article is for general information only and doesn’t take into account your objectives, financial situation or needs. You should assess your financial position, personal objectives and needs before making a decision based on this information.