Welcome to the December and final instalment of our much-anticipated financial market commentary.
As many may remember, 2022 started with optimism around the lifting of travel restrictions. As boarders reopened, supply train disruptions magnified which helped cause inflation to spike. Many at this point believed inflation would be short lived, however, the war in Europe quickly changed the narrative!
By mid-year, interest rates around the globe started to rise, resulting in losses for bond holders and equity investors. We then saw Cryptocurrencies explode due to miss management of FTX – one of the world’s biggest exchanges. Naturally this sent shockwaves through the likes of Bitcoin and other popular coins.
Fortunately, markets have since settled - with inflation showing signs of moderating. Investors who remained exposed throughout the “roller coaster” are now beginning to see significant improvement with positive returns again evident.
Like 2022, next year will see significant challenges – especially for home borrowers. Although rates have increased, many borrowers are yet to experience the pain in full – courtesy of low fixed rates available during COVID. Should government modelling be correct, it’s likely that many Australian homeowners may experience mortgage stress from mid-2023.
Thankfully, it’s not all “doom and gloom”. As bond prices took a hit this year, we expect to see a significant recovery in bonds – especially if rates begin to decline due to recessionary impacts. In addition, from a specific sector view, we should also see solid outcomes for businesses exposed to consumer staples, healthcare and communication services.
Lastly, with Christmas only a few sleeps away, our office will be closed from Wednesday the 21st of December and will reopen on Monday the 9th of January 2023. Thank you for your support and from the team at Synergy Private Wealth, we wish you a safe and prosperous New Year.