Monthly Highlights:
- Global share markets climbed through a challenging August, supported by strong earnings and technology gains despite renewed geopolitical and inflation concerns. Renewed tensions in the US-Israel-Iran conflict lifted energy prices, adding to inflation and interest-rate concerns. Markets held firm, but the prospect of rates both rising and staying higher for longer kept investors cautious.
- Australian shares climbed despite markets pricing in additional policy tightening from the RBA. Healthcare, materials, utilities and technology led the market, while financials and consumer discretionary companies fell, and smaller companies outperformed their larger peers. Strong inflation and firmer than expected household spending data also lifted expectations of another Reserve Bank rate rise, increasing the risk that there will be further pressure on borrowers and parts of the economy.
- International shares advanced, with the stronger Australian dollar favouring hedged investments by reducing currency drag. Japan and the US led the gains, supported by strength in technology and other growth-sensitive sectors. Europe and the UK rose more modestly, with less exposure to sector leaders, while China and India slipped on growth concerns. Technology, materials and healthcare were key drivers, highlighting a broadly positive but uneven month across global markets.
- Fixed interest delivered mixed results as Australian bond yields rose by more than their global counterparts. Australian government and high-quality corporate bonds eased as stronger inflation increased expectations of another Reserve Bank rate rise, lifting yields and weighing on prices. International bonds held up better due to steadier rate expectations, while higher-risk corporate bonds benefited from stronger investor confidence.
