Market update and year in review for 2023-24

2023-24 investment year in review

Inflation and higher-for-longer interest rates remained key themes for financial markets throughout the 2023-24 financial year.

Major central banks continued to control inflation by maintaining monetary tightening. As inflationary pressures started to subside and higher interest rates slowed down economic growth, some central banks in advanced economies, including the European Central Bank (ECB) and the Bank of Canada, began to ease their monetary policies.

While the market has been particularly attuned to signals for the US Federal Reserve's future rate adjustments, the downwards interest rate moves made by Europe and Canada marked a significant pivot, reflecting a rebalancing act between achieving inflation targets and fostering economic growth.

Meanwhile, China’s economic growth is still on the way to recovery from a prolonged lockdown.

Where to from here?

Domestically, the Reserve Bank of Australia still seeks a ‘narrow path’ between curbing inflation and preserving the strong labour market. However, pressure for tightening monetary policy is re-emerging as recent macroeconomic data suggests that Australian inflation remains stubbornly high. 

Looking forward, China’s subdued domestic demand and ongoing weak economic sentiment, driven by a structural property downturn, reduce the upside risk to global inflation via China’s surged export prices.

Upside risks to inflation linger due to geopolitical tensions

While global inflation is expected to ease further, escalating geopolitical tensions, particularly in Eastern Europe and the Middle East, linger.

Commodity prices have fluctuated due to ongoing supply chain disruptions, such as the October 2023 Israel-Hamas attack, which led to a sharp increase in oil prices.

While oil prices have recently come down from peak prices, they remain highly susceptible to escalations in Middle East conflicts due to the region’s critical role in global oil supply.

Since underlying inflation remains above central banks’ target ranges in most advanced economies, the resurgence in commodity prices will challenge central banks’ goal to return inflation to target levels. This will potentially require policy rates to stay high for a longer period.

Shifts in political power have brought back policy uncertainty against the backdrop of weakening fiscal positions

Heightened policy uncertainty is adding to the complexity of the global financial landscape.

In advanced economies, substantial government spending during the COVID-19 pandemic has led to higher levels of public debts and budget deficits, leaving fiscal positions more susceptible to shocks.

Any adverse changes in fiscal policy stemming from political power shifts can add to market volatility, at least in the near term.

Elections in major European and emerging markets have raised concerns about policy uncertainty, but their impacts so far have been proven to be short-lived and concentrated in local markets.

For the second half of the 2024 calendar year, investors are closely watching the developments in economic and trade policies resulting from the upcoming US presidential election.

Despite global financial landscape complexities, financial assets have achieved another strong year of performance

Financial markets have shown resilience and growth potential, driven by expectations about easing monetary policy and continued stable economic conditions.

Like the 2022-23 financial year, overseas shares were a strong-performing asset class, posting double-digit returns in 2023-24. The US market was a key contributor to this result, with a return of just over 15% for the year in USD terms.

Advancements in artificial intelligence and an optimistic outlook for AI propelled a select group of US technology stocks to new heights. The companies expanded their market share and outperformed the other sectors of the US share market throughout the 2023-24 financial year.

The Australian equity asset class followed suit, although its 2023-24 financial year return was not as strong as overseas shares.

The banking sector was the primary driver of this result, with particularly strong net interest margins amid high lending rates and relatively low default rates fuelled by an economic soft landing. This resulted in a strong rally in Australian bank stocks, with a total return to banks of over 30% in aggregate for the 2023-24 financial year.

How your super performed in 2023-24

As of 30 June 2024, our Balanced (MySuper) investment option provided a return of 8.80 per cent for the 2023-24 financial year. Our pension Balanced option returned 9.53 per cent for the same period. We have retained our record of producing a strong long-term result, once again outperforming the average MySuper fund over the 10 years to 30 June 2024.

On the back of the market strength, all of our other our pre-mixed investment options achieved positive returns over the 2023-24 financial year.

Performance history 

To see how your super has performed over the last one, three, five, seven or ten years, visit Our performance.