19 Apr 2023
Quarterly Market & Economic Update with Chris Lioutas – Quarter 1, 2023
Article provided by Chris Lioutas – PSK Chief Investment Officer
Markets have been in flux for the last couple of years from the impact of the pandemic on the economy. Last year inflation soared resulting in a series of aggressive interest rate hikes from the RBA and other Central Banks. The results for investment markets were concerns about the pace and length of the rate hikes and the impact on their investments.
Chris Lioutas discusses -
- Market Movements in Q1 – This year the markets have had a much better start, and this is mainly due to the certainty and clarity offered by central banks and regulators. Investors are comfortable with the forward outlook and are confidently placing money in a variety of asset classes with corporates providing better guidance. Ongoing there are still some issues to work through, but we see both risks and opportunities ahead.
- Interest Rates & Inflation – We are starting to see the cycle of interest rate hikes have an impact on inflation as it begins to reach its peak. Central banks have a target number or percentage level for inflation and at present, we are considerably higher than where we need to be, and this is the case globally too. Central banks will continue to monitor inflation and there may be a need for further interest rates hikes to ensure inflation continues to fall over the coming months and quarters. That said, the next 12 to 18 months could begin to see inflation levels coming down and rate cuts start to take place.
- The Banking Crisis – It has been an interesting quarter for banks, with regional banks in the US needing to be saved by regulators and the same with Credit Suisse in Europe. The collapse of these banks is really down to a crisis of confidence with investors concerned about access to their funds. This led to whispers with deposit holders taking money out of the banks resulting in the collapse of these banks and the need for Central Banks to help save the banks and provide comfort to deposit holders. This has been swift corrective action by the Central Banks and at present, there is no real concern about the banking outlook offshore. Locally we are in really good shape in terms of capital the banks hold, leading to an overall positive outlook.
The Investment & Research team at PSK are always monitoring market conditions and data points to ensure our portfolios align with our overall long-term objectives.
If you’d like to discuss any of the points raised, please do not hesitate to contact us on 8365 8300.
General Advice Warning - Any advice included in this video has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.
