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  • Synergy Private Wealth

Navigating Financial Shifts: Key Insights for Savvy Investors

Most are aware that we have Trump vs. Biden II looming later this year, but suddenly, Europe is taking the limelight with the UK and France calling early elections, something which both incumbent Prime Ministers could easily lose.

Equity markets dislike uncertainty, as illustrated by the French CAC's initial 2.4% plunge following Macron’s surprise announcement. Our concern is whether stocks can maintain their momentum amid increasing political and economic uncertainty.

This month, the European Central Bank (ECB) and the Bank of Canada (BOC) both cut interest rates, raising the question of who’s next. The US was a favourite, but strong employment data saw traders reconsider hopes for rate cuts through 2024/25.

Global (PMI) indicators recently showed global growth ticking up and broadening out after being dominated by the US in 2023. Stronger global growth and geopolitical concerns are lifting commodity prices, renewing concerns about inflation and leading financial markets to push back expectations for rate cuts. Global headline inflation has significantly fallen from its 2022 highs and is running between 2.5%-3.5% across major economies.

Despite negative headlines and concerns about Chinese GDP growth, particularly in the property sector, industrial production has held up. Industrial metals demand from China, which accounts for 40-60% of global demand, reflects strong growth in areas like solar panels, electric cars, airplanes, and infrastructure construction.

Closer to home, office occupancy continues to improve, with Perth and Adelaide seeing peak day occupancy in the high nineties. Businesses are pulling all the levers to get employees back into the office. Even previous advocates for WFH, including tech companies, are pushing for more in-person presence due to collaboration and innovation benefits.

Switching to Australian residential property, varied growth continues to be seen - with supply being a key factor. Areas like Tasmania and Victoria have an oversupply of housing, causing downward pressure on prices. Conversely, tighter supply levels across Brisbane, Perth, and Adelaide continues to drive strong growth.

Source: CoreLogic In May, Treasurer Jim Chalmers delivered the federal budget for 2024/2025. The government announced a surplus of $9.3 billion this financial year, with net debt remaining at $500 billion.

Key elements of the budget include: 

  • Stage 3 tax cuts: Starting 1st July 2024, the average Australian will pay $1,888 less in tax per year.

  • Energy bill relief: $3.5 billion for all Australian households and around one million small businesses. Each household will receive a $300 rebate from 1st July.

  • Superannuation on Paid Parental Leave (PPL): Starting for parents of babies born or adopted on or after 1 July 2025, with payments to super funds beginning 1 July 2026.

  • Strengthening Medicare: $2.8 billion investment, including a $1.2 billion package to address health system pressures.

  • Support for small businesses: $290 million to extend the $20,000 instant asset write-off for 12 months, $25.3 million to improve payment times, and $23.3 million to increase e-Invoicing adoption.

Taxation Planning Tips:As we approach the end of the financial year, consider the following strategies to help optimise your tax position: 

  • Consider deductible super contributions.

  • Consider selling investments that may have fallen in value to offset realised gains.

  • Prepay deductible insurance premiums or loan interest.

  • Defer assessable income into the next financial year, if possible.

* Please seek advice from a qualified professional regarding your specific situation before attempting these strategies on your own.

Synergy Private Wealth

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