Market Update – May 2022

Highlights:

  • Australia’s S&P/ASX 200 Index finished lower over the month masking positive performance from seven out of 11 underlying sectors. Information Technology (-10.4%), Materials (-4.3%) and Consumer Discretionary (-3.2%) were the major laggards.

  • Inflation remains a concern in the USA, with the 8.5% annual rate being the highest level since December 1981.

  • The Russian war on Ukraine continues to put pressure on energy prices and prompting the IMF to downgrade global annual growth projections to 3.6%.

  • Inflation rose to 5.1% in Australia – a 20-year high – leading to calls for the RBA to raise the base rate from 0.1% at its May meeting. 

Global economies

Global Covid-19 cases continue to rise with numbers surpassing 513 million cases and 11.5 billion vaccine doses administered as at the end of April.

US

Inflation jumped 1.2% in March, in line with forecasts, pushing the annual rate to 8.5%, the highest since December 1981. This has put pressure on the Federal Reserve to increase interest rates at their next meeting.

Europe

The European Central Bank held interest rates at 0.0% during the April meeting, consistent with the prior March quarter, with President Lagarde noting the timeline for potential interest rate increases has not been determined.

China

GDP grew 1.3% in the March quarter, with the yearly growth rate coming in at 4.8%, ahead of the 4.4% expected and the 4.0% recorded in December.  

Asia Region

The Bank of Japan left its key short-term interest rate unchanged at -0.1% during its April meeting. It also revised its inflation forecast up to 1.9% but believes inflation is largely driven by one-time causes.

Australia

March’s unemployment was unchanged at 4.0%. slightly above the anticipated 3.9%. Retail sales increased by 1.6% in March.

 

Read the full May market update report >>

 

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The information in this Market Update is current as at 10/5/2022 and is prepared by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445 on behalf of IOOF Holdings Ltd and its subsidiaries. Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Before making any decisions based on the content of this document, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness. Past performance is not a reliable indicator of future performance.