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Month in Review as at June 2023

Index returns at end June 2023 (%)

Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated).

Market Key Points

• The Australian equity market returned 1.8% in June. Strong returns were evident in Materials (4.8%), Information Technology (3.5%) and Financials ex Property (3.1%). All sectors finished higher during the month except for Property (-0.1%), Communications (-1.0%), and Health Care (-6.6%).
• Global markets finished higher, with the S&P 500 (USD) returning a strong 6.6%, while the Nikkei 225 Index (JPY) returned 7.6%. The FTSE Eurotop 100 Index (EUR) returned 2.7%.

Australian equities

The S&P/ASX 200 Accumulation Index finished June up 1.8%. Materials led all sectors, finishing up 4.8%.

Information Technology (I.T.) rose again (+3.5%), with Financials (+3.1%), Utilities and Consumer Staples (both +2.9%) also posting healthy gains. Health Care (-6.6%) fell significantly, dragged down by an announcement from its largest constituent, CSL, that forthcoming foreign currency headwinds were expected to be higher than previously estimated. Despite an extensive list of economic headwinds, the Index finished the Financial Year up 14.8%.

I.T. shares continued to ride the artificial intelligence (AI) wave and followed the gains that were seen globally in the sector; through the Financial Year it led all sectors, gaining 38%.

Chinese data releases solidified the weakening activity there and led to action to further stimulate the economy, helping Materials to lead the month. Meanwhile, a tight labour market and sticky inflation have seemingly increased the likelihood of further RBA cash hikes, mitigating the gains in those sectors sensitive to interest rates.

Global equities

Global equities had another positive month, while emerging markets underperformed developed market counterparts returning 0.9% (MSCI Emerging Markets Index (AUD)) versus a 3.1% gain according to the MSCI World Ex Australia Index (AUD).

The U.S had one of its better performances of the year, driven in part by the Federal Reserve holding interest rates steady for the first time in over 12 months. This was supplemented with sustained strides in the technology sector. Large caps led a gain of 6.6% in the S&P500 Index (in local currency terms).

Equities across Asia were relatively strong, Japanese stocks continued to rally with sound economic data around production levels across industries. The Nikkei 225 Index reached new highs again with a gain of 7.6% for the month (in local currency terms) despite potential concerns around inflation and yield curve control.

China’s economic growth recovery efforts see optimistic levels of manufacturing and industrial production, with the Central Bank releasing cuts to lending rates. This was reflected by the Hang Seng Index and the CSI 300 Index, returning 4.5% and 2.1% respectively (in local currency terms) for the month.

Property

The S&P/ASX 200 A-REIT Accumulation index was relatively neutral in June finishing the month 5bps lower. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) performed strongly, returning 3.2%, driven by a surge in the office sector (+10.4%), following a positive reception of a New York transaction. Australian infrastructure continued its positive momentum during June, with the S&P/ASX Infrastructure Index TR advancing +0.6% for the month.

The Australian residential property market experienced an increase by +1.3% Month on Month (as represented by CoreLogic’s five capital city aggregate). Sydney was the biggest riser (+1.8%) alongside Brisbane (+1.4%) also performing strongly. All five capital cities performed positively for the second consecutive month.

Fixed Income

For the first time in over a decade the Australian yield curve has inverted, with growing market concern around the possibility of a recession. The RBA continues to tighten monetary policy and has lifted the cash

rate by 25bps in its June 6 meeting, bringing the target cash rate to 4.1%. The cash rate is now 375bps higher than what it was 12 months ago. The market responded with Australian 2-Year and 10-Year bond yields rising by 66bps and 68bps respectively, their highest levels in a decade. Higher yields led to losses in fixed income markets, with the Bloomberg AusBond Composite 0+ Yr Index returning -1.95% over the month.

In the US, the Federal Reserve voted to maintain the May federal funds rate of 5%-5.25%. Despite the reprieve of a rate hike, fixed income markets fell, and US 10-Year and 2-Year Treasury yields rose by 49bps and 41bps, respectively. Globally, fixed income markets performed largely the same with the Bloomberg Barclays Global Aggregate Index (AUD) returning – 2.79% over June. Yield curve inversion seems to be a major trend with looming threats of further rate hikes, weak consumer confidence, and recession.

Economic key points

• Financial conditions are likely to remain tight as central banks maintain quantitative tightening and continue their hawkish rhetoric, signaling the potential for further rate rises.
• RBA increased the cash rate to 4.1%.
• The Fed kept the cash rate at 5.25% while the ECB increased interest rates by 25 bps to 4.0%.

Australia

The RBA unexpectedly raised the cash rate by 25bps to 4.1% at its June meeting, while keeping the door open for further tightening as inflation remained persistently high and wage growth picked up. This decision brought a total of 4% increases since May 2022, pushing the cash rate to its highest level since April 2012. The Westpac-Melbourne Institute Index of Consumer Sentiment for May rose to 79.2, with the index at near recession lows for the past year.

May’s monthly headline inflation figure came in at 5.6%, well above the RBA’s targeted 2% to 3% range, but still the smallest increase since April last year. The unemployment rate eased down to 3.6% in May, against the expected 3.7%, as 76,000 jobs were added. Retail sales for May rose by 0.7%, above the market expectations of 0.1%, reflecting some resilience in spending with consumers taking advantage of larger- than-usual promotional activity and sales events. This is also reflected in the 4.2% rise in the annual rate.

Composite PMI fell to 50.1 in June, with domestic demand driving new orders driven. The NAB business confidence index dropped 4 points to -4 in May, with declines in all industries except mining, manufacturing, and transport and utilities.

The trade surplus increased to $11.79 billion in May, above the market forecasts of $10.5 billion as exports to China grew 9% month on month.

Global

The World Bank and OECD both released updated growth forecasts for the remainder of this year and 2024. The World Bank increased its global growth forecast for 2023 to 2.1%, up from the earlier 1.7%, with the OECD increasing its estimate marginally to 2.7%. For 2024, the OECD estimate is unchanged at 2.9%, however the World Bank cited central bank monetary tightening and increasingly restrictive credit conditions for its decision to cut its estimate from 2.7% to 2.4%.

US

The Federal Reserve maintained the cash rate at 5.25% in its June meeting with officials suggesting that it may raise rates further this year.

Inflation rose 0.1% in May, slightly below the 0.2% market expected, with the with the annual rate dropping to 4.0%.

Non-farm payrolls added only 209,000 jobs in June, below the forecast of 225,000 jobs. The unemployment rate rose to 3.7% in May, above the market expectation of 3.5%. Consumer Confidence increased markedly to 109.7 in June, reflecting belief that labour market conditions will remain favourable and that there will be further declines in inflation, Retail sales in May increased 0.3%, well above the expected -0.1% with the annual rate increasing 1.6%. The S&P Global Composite PMI fell to 53.2 in June.

The trade deficit narrowed to US$69 billion in May on the back of a fall in imports.

Euro zone

In June the European Central bank raised the key interest rate by 25 bps to 4.0%, citing persistently high inflation. Christine Lagarde, ECB President, noted that with wage growth pressuring inflation, the bank needs to bring interest rates into sufficiently restrictive territory and therefore is likely to increase rates again in July. The annual inflation rate dropped to 5.5% in June, slightly below market expectation of 5.7%. Core inflation increased to 5.4%, supporting the view that policymakers are likely to continue raising rates in the upcoming months. Unemployment was flat at 6.5% in May, meeting market expectations and indicating a tighter labour market.

Consumer confidence rose to -16.1 in June, the highest rate since February 2022. Retail sales for May came in flat, against expectations of 0.2% The annual rate was down 2.9%, below the anticipated -2.7%.

The Composite PMI dropped to 49.9 in June, signaling a slowing of economic activity due to a deepening downturn in factory output and softer expansion in services. PPI dropped 1.9% in May compared to the expected -1.8%, with the annual rate falling 1.5%, against the forecast -1.3%. This drop in process was primarily driven by the decrease in energy costs, which fell 5% in the month.

UK

The Bank of England increased interest rates by a surprise 50bps to 5.0% in June in response to stubbornly high inflation. Policymakers have also flagged further hikes if the ongoing inflationary pressures persist.

Annual inflation was steady at 8.7% in May, above the expected 8.4% and remains the highest level of the G7.

The unemployment rate came in at 3.8% in April, below market expectations of 4.0% and a prior reading of 3.9%. Consumer confidence rose to -24 in June, better than the expected -26 as households grew more optimistic about their finances and the economy. Retail sales rose 0.3% in May, with the annual rate falling 2.1%, below the expected -2.6%.

The composite PMI index fell to 52.8 in June, missing market expectations and aligning with Europe wide trend of steady services growth offsetting the accelerated slump in manufacturing.

Annual PPI fell sharply to 2.9%, below the expected 3.6%, due mainly to the continued fall in petroleum prices.

China

Annual inflation was unexpectedly flat in June, compared to an expected 0.2% increase.

The unemployment rate was unchanged at 5.2% in May, in line with market forecasts and below the government target rate of 5.5%.

Annual retail sales increased by 12.7% in May, below the forecast 13.6% and well down on the record increase of 18.4% in April.

Composite PMI fell to 52.5 in June, with the services sector continuing its post COVID rebound but at a slower pace than previous months. Manufacturing activity decline for a third straight month as demand falters both in China and abroad.

China’s economy grew faster than expected in the first quarter largely due to a strong post-COVID rebound in consumption, but policymakers have been unable to sustain the momentum in the second quarter. The government is expected to announce more stimulus measures, but these are likely to be smaller and more targeted as concerns over debt and capital flight remain.

Japan

As expected, the Bank of Japan kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0% in its June meeting by unanimous vote. This approach is in sharp contrast to other major central banks who have raised borrowing costs to decade highs.

Referencing the economy as a whole, the board expects output to recover toward the middle of FY 2023, supported by pent-up demand.

The annual inflation rate unexpectedly declined to 3.2% in May, below the forecast 4.1%.

The unemployment rate was flat at 2.6% in May, in line with market forecasts.

The consumer confidence index rose to 36 in June, matching forecasts, and is the highest reading in 18 months. Retail sales increased 1.30% in May, with the annual rate rising 5.7exceeding the market forecast of 5.4%.

The composite PMI fell to 52.1 in June, with softer expansion in services and the eleventh fall the past year for manufacturing.

Currencies

The Australian dollar (AUD) gained ground over the month of June, closing 3.2% higher in trade weighted terms to 61.7, appreciating against all four referenced currencies in this update.

June found itself filled with mixed signals for the market, volatility primarily being influenced of the course of the month by an assortment of both positive and negative economic data releases from China and the US, amongst disparate signals from the RBA on monetary policy and the status of the rate hike cycle.

Relative to the AUD, the Euro (EUR) led the pack in June, depreciating by -0.5%. Conversely, the Japanese Yen (JPY) was the laggard of the month, falling by -6.4% relative to the AUD. Year-on-year, the AUD remains behind the Pound Sterling (GBP), EUR and US dollar (USD) by -7.5%, -7.4%, and – 3.6% respectively, however is now ahead of the JPY by 2.5%.

Important notice: This document is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No.421445 (Lonsec).

Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. It is not a “personalised service” (as defined in the Financial Advisers Act 2008 (NZ)) and does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s).

Copyright © 2023 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This report is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this report may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This report may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.

Sherlock Wealth Pty Ltd is a Corporate Authorised Representative of Matrix Planning Solutions Pty Ltd AFSL & ACL No. 238256, ABN 45 087 470 200.

Month in Review as at May 2023

Index returns at end May 2023 (%)

Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated).

Key Points

• The Australian equity market finished down 5% in May. While strong returns in Information Technology were evident, most sectors of the market finished the month lower.
• With the exception of the US and Japan, most global markets finished May The S&P 500 (USD) returned 0.4%, while the Nikkei 225 Index (JPY) returned 7.0%.
• European markets were softer over the month, with FTSE 100 Index (GBP) and FTSE Europtop 100 Index (EUR) weaker 4.9% and 2.0% respectively. Chinese markets, as represented by the CSI 300 Index (CNY) finished the month 5.6% weaker.

Australian equities

In May the S&P/ASX 200 Accumulation Index finished with a loss of 2.5%. Rising costs have begun to materialise for consumers as retail turnover plateaued, with another RBA hike and a fall in the iron ore price also impacting returns. Information Technology (I.T.) shares rose significantly (+11.6%), with Utilities making the only other meaningful jump (+1.1%). Consumer Discretionary (-6.1%) and Staples (-4.6%) were noteworthy laggards. Materials (-4.4%) and Financials ex-Property (-3.3%) also dragged on the Index. In total, 7 of the 11 sectors posted losses. I.T. advanced on the positive news from some of its names, while attention to the rise of artificial intelligence also aided gains.

Meanwhile, retail spending data led to investors positioning for a slowdown, as cost of living pressures saw consumers pull back on non-essential shopping. As doubts linger around the economic recovery in China, the sliding price of iron ore hampered Materials. Financials ex-Property were pushed down by poor US banking sentiment, as well as concerns about the domestic outlook for earnings and margins.

Global equities

Global equities ended with a predominantly negative month with declining economic data. Emerging markets underperformed developed market counterparts, returning 0.4% (MSCI Emerging Markets Index (AUD)) versus a 1.2% gain according to the MSCI World Ex Australia Index (AUD).

The U.S. markets had mixed results, with the debt ceiling debate being suspended on top of another expected rate hike. Lower unemployment and promising developments in the technology sector, particularly artificial intelligence and chipmakers, led a positive gain of 0.4% in the S&P500 Index (in local currency terms).

Equities across Asia were also mixed, Japanese stocks became more attractive for investors with sound earnings results with share buyback announcements for large cap stocks. The Nikkei 225 Index reached new highs with a gain of 7.0% for the month (in local currency terms).

China’s economic growth recovery continued to perform beneath investors’ expectations with demand also decreasing. This was reflected by the Hang Seng Index and the CSI 300 Index, returning -7.9% and -5.6% respectively (in local currency terms) for the month. Investors are waiting for stronger indications of an economic recovery in China, potentially led by the technology sector.

Property

The S&P/ASX 200 A-REIT Accumulation index regressed in May after a strong rally in April, with the index finishing the month –1.8% lower. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also regressed, returning -3.8% for the month. Australian infrastructure continued its positive momentum during May, with the S&P/ASX Infrastructure Index TR advancing +1.5% for the month.

The Australian residential property market experienced an increase by +1.4% Month on Month (as represented by CoreLogic’s five capital city aggregate). Sydney was the biggest riser (+1.8%) alongside Brisbane (+1.4%) also performing strongly. All five capital cities performed positively in the month for the first time in over two years.

Fixed Income

Credit markets saw a decline as interest rates rose again in May when the Reserve Bank of Australia increased the official cash rate from 3.60% to 3.85%, leading to a – 1.21% return of the Bloomberg AusBond Composite 0+ Yr Index. Over the course of the month, spreads widened as Australian 2Y and 10Y Bond yields rose by 50bps and 27bps, respectively. Persistent inflation pressures along with a strong labour market and rising wages have the potential to keep inflation rates above the RBA target for an extended period.

Global markets were taken aback in early March by the unexpected failure of three small- to mid- size US banks, followed by the collapse of Credit Suisse. The effects from the March turmoil continue to affect markets with the Bloomberg Barclays Global Aggregate Index (AUD hedged) returning -0.54% over May. In a decision widely expected by markets, the U.S Federal Reserve again increased rates by 25bps bringing the federal funds rate to a target of 5.0%-5.25%. Bond yields continued to grow with US 2Y and 10Y Treasury Note yields rising 45bps and 22bps, respectively.

Key points – Economic

• Services inflation, rent rises and wage pressures persist, meaning inflation could remain sticky and above central bank target ranges for some time.
• RBS increased the cash rate to 3.85%
• Both the Fed and ECB increased interest rates by 25 bps to 5.25% and 3.75% respectively.

Australia

The RBA increased the cash rate by 25bps to 3.85% at its May meeting. The board agreed further increases may still be required, depending on how the economy and inflation evolve. The Westpac-Melbourne Institute Index of Consumer Sentiment for May fell to 79.0, from 85.8 in April, with consumers showing deep pessimism after a surprise interest rate hike and mildly disappointing federal budget. A large number of home borrowers will roll off ultra-low fixed rate home loans onto significantly higher mortgage rates in the coming months, further dampening consumer confidence.

GDP grew 0.2% over the three months to 31 March 2023, down from 0.5% in the previous quarter and below the expected 0.3 % increase.

The inflation rate rose to 6.8% in April, driven by energy prices, with the underlying rate easing to 6.5%.

April’s unemployment rate increased to 3.7%, above the market expectation of 3.5%. Retail sales were flat as well, below market expectations of a 0.3% rise as consumers spent less on discretionary goods in response to cost-of-living pressures and rising interest rates.

Composite PMI fell to 51.6 in May, with services expanding at a slower pace than previous months. The NAB business confidence index rose 1 point to 0 in April, still below the average, with confidence still negative in retail, wholesale and finance, business and property.

The trade surplus decreased to $11.2 billion in April, below the market forecasts of $14 billion with the main driver a fall in total exports to China of 15.4%.

Global

Inflation is likely to ease substantially in the coming months as base effects roll off and tighter credit conditions hit consumption and aggregate demand. However, services inflation, rent rises and wage pressures persist, meaning inflation could remain sticky and above central bank target ranges for some time.

Financial conditions are likely to remain tight as central banks keep a foot on the brake while managing pockets of stress via targeted liquidity support. Consumer confidence remains weak globally and with the cash buffers built up during the pandemic largely eroded, signs that economic growth has begun to slow have emerged.

US

The Federal Reserve increased the cash rate by 25bps to 5.25% in its May meeting with officials expressing uncertainty about how much more policy tightening may be appropriate in the future. Inflation rose 0.4% in April, matching market expectations, with the annual rate falling to 4.9%.

Non-farm payrolls unexpectedly added 339,000 jobs in May, way above the forecast 190,000 jobs. The unemployment rate rose to 3.7% in May, above the market expectation of 3.5%. Consumer confidence fell to 102.3 in May, down from an upwardly revised 103.7 in April. Retail sales in April increased 0.4%, well below the expected 0.8% with the annual rate increasing 1.6%. The S&P Global Composite PMI rose to 54.3 in May on the back of increased activity in the services sector.

The trade deficit widened to a six-month high of US$74.6billion in April, compared to the expected US$75.2 billion.

Euro zone

With inflation remaining well above the target level, the European Central Bank raised the key interest rate by 25 bps to 3.75%. The latest announcement slows the pace of rate hikes after the ECB had raised the key interest rate by 0.5% at its previous three opportunities. The annual inflation rate fell to 6.1% in May, below the expected 6.3%, largely driven by the 1.7% decrease in energy prices. Unemployment was flat at 6.5% in April, meeting market expectations.

Consumer confidence increased slightly to -17.4 in May. Retail sales for April came in flat, against expectations of 0.2% The annual rate was also down 2.6%, above the anticipated -3.0%.

The Composite PMI dropped to 52.8 in May. Services activity continued to grow, albeit at a slower rate, while manufacturing production declined at the sharpest pace since November due to rapidly deteriorating order books. PPI dropped 3.2% in April, slightly below the expected -3.1%, with the annual rate dropping to 1%, below the predicted 1.4%.

Persistent inflation has helped push Germany into recession, with the economy contracting 0.3% in the first three months of the year, following the 0.5% contraction in the last three months of last year. The recession is likely to be not as long or deep as some predicted with the German central bank forecasting modest growth in Q2 2023.

UK

The Bank of England increased interest rates by 25bps to 4.5% in May as it continues to battle high inflation.

Inflation rose 1.2% in April, bringing the annual rate to 8.7%, which is below the 10% mark for the first time in eight months. The central bank now sees inflation falling to 5.1% in Q4 2023, compared to 3.9% in the February forecast and to meet its 2% target by late 2024.

The unemployment rate for March came in at 3.9% against expectations of 3.8% and following a prior reading of 3.8%.

Consumer confidence rose to -27 in May, matching expectations. Annual retail sales fell 3.0%, above the anticipated 2.8% fall.

The composite PMI index fell to 54 in May, with divergence between the services and manufacturing sectors continuing as the expansion for service providers (55.2 vs 55.9 in April) offset the decline for goods producers (47.1 vs 47.8).

PPI was flat month on month in April, with the annual rate easing sharply to 5.4%, mainly due to the further decline in prices of petroleum products.

China

Inflation declined 0.2% in May and rose 0.2% year on year, highlighting Beijing’s challenge to stimulate enough economic activity and growth to kill the threat of deflation.

The unemployment rate declined to a 16-month low of 5.2% in April, below the government target of 5.5%. In response to the record high unemployment rate of 16-24 year of 20.4%, the government has adopted an ‘employment- first strategy’ with the hopes of adding 12 million new jobs this year.

Annual retail sales for April increased by 18.4%, missing market forecasts of 21.0% but sharply accelerating from the 10.6% gain in March.

Composite PMI rose to 55.6 in May, the fifth straight month of growth in private sector activity and the steepest pace since December 2020.

India overtook China as the world’s most populous country in April. India’s population is virtually certain to continue to grow for several decades. By contrast, China’s population reached its peak size recently and experienced a decline during 2022.

Japan

Japan’s GDP expanded an annualised 2.7% in January-March, much higher than the preliminary estimate of a 1.6% growth and economists’ median forecast for a 1.9% rise. This expansion was spurred by a post pandemic pick up in domestic spending and company restocking and helped offset the decrease in exports due to slowing global demand.

Inflation increased 0.6% month on month with the annual rate rising to 3.5% in April. The unemployment rate fell to 2.6% in April, below the expected 2.7%.

The consumer confidence index rose to 36 in May, slightly below the forecast 36.1, as household sentiment strengthened across most of the indices. Retail sales fell 1.20% in April, with the annual rate rising 5%, missing the market forecast of 7%. Despite missing forecasts, it was the 14th consecutive month of expansion as the country continues to recover from the pandemic slump.

The composite PMI increased to 54.3 in May, with service sector expanded at a record pace for the second straight month, while manufacturing production returned to growth for the first time in 11 months.

Currencies

The Australian dollar (AUD) closed out the month of May with no change in trade weighted terms, holding at 59.8.

May saw a return to more ‘normal’ trading ranges with the AUD/USD pair marginally breaching the 10-year average of 3.5 cents.

Volatility throughout the month was primarily led by the unexpected interest rate hike of 0.25% by the RBA, in addition to weaker than expected Purchasing Managers Index (PMI) survey data released in China.

Relative to the AUD, the US dollar (USD) led the pack in May, appreciating by 2.3%. Conversely, the Euro (EUR) was the laggard of the month, falling by 1.2% relative to the AUD. Year-on-year, the AUD remains behind the USD, EUR, Pound Sterling (GBP) and Japanese Yen (JPY) by -10.1%, -9.3%, -8.4% and -2.2% respectively and is down by -4.5% in trade weighted terms.

Important notice: This document is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No.421445 (Lonsec).

Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or limited to “General

Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. It is not a “personalised service” (as defined in the Financial Advisers Act 2008 (NZ)) and does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s).

Copyright © 2023 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This report is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this report may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This report may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.

Sherlock Wealth Pty Ltd is a Corporate Authorised Representative of Matrix Planning Solutions Pty Ltd AFSL & ACL No. 238256, ABN 45 087 470 200.

Month in Review as at April 2023

Index returns at end April 2023 (%)

Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated).

Key Points

• The Australian equity market returned 1.9% in April driven by strong returns in property (+5.3%), IT (+4.8%) and Industrials (+4.5%). Materials were a clear laggard (-2.6%).
• Globally, developed markets had reasonable gains, particularly the UK’s FTSE 100 Index returning 3.4% in local currency terms.
• Asian markets fared worse with the Hang Seng Index (HKD) finishing the month down -2.4% and the CSI 300 Index (CNY) down -0.5%.

Australian equities

The S&P/ASX 200 Accumulation Index finished April with a gain of 1.9% after two negative performing months. Softer inflation figures and a pause in the RBA’s rate hikes led to strong gains in the first half of the month, while a slump in commodity prices, particularly iron ore, moderated those gains in the back half of April. Property was a key contributor (+5.3%), with I.T. (+4.8%) and Industrials (+4.5%) also performing strongly. Materials (-2.6%) was the sole detractor.

Property led all sectors for the month off the back of the RBA’s rate decision, meanwhile, slowing construction activity in China contributed to the declines in Materials stocks. Overall, domestic markets were driven by relief from inflation data and the interest rate pause, while concerns around the U.S. banking system were somewhat tempered. These factors were all conducive to a positive month for the Index.

Global equities

Global equities started with another positive month despite mounting higher interest rates. Emerging markets underperformed developed market counterparts returning 0.2% (MSCI Emerging Markets Index (AUD)) versus a 3.2% gain according to the MSCI World Ex Australia Index (AUD).

A greater proportion of earnings surprises and decreased investor expectations have buoyed the U.S. markets, coupled with an outlook for disinflation to continue. Over half of companies have now reported, with the S&P 500 Index posting a 1.6% return (in local currency terms) for the month.

UK economic data followed a similar pattern with headline inflation also falling slightly. The FTSE 100 Index was one of the top performers globally, having a gain of 3.4% (in local currency terms). This was driven by a resurgence in value stocks leading the UK index charge.

Equities across China saw a decline off the back of concerns on the economic recovery slowing down. This was reflected by the Hang Seng Index and the CSI 300 Index, returning   -2.4% and -0.5% respectively (in local currency terms) for the month. Expectations are that China’s central bank will ease policy to support weakening economic data.

Property

The S&P/ASX 200 A-REIT Accumulation Index finished +5.3% higher in the month of April as the A-REIT sector rebounded from its negative first quarter. In a global context, G-REITs (as represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) ended April +1.9% higher. The Australian Infrastructure sector (As represented by the S&P/ASX Infrastructure Index) finished +2.3% higher in line with the A-REIT sector.

The Australian residential property market experienced an increase by +0.7% Month on Month (as represented by CoreLogic’s five capital city aggregate). Sydney was the biggest riser alongside Perth (+0.6%) also performing strongly. In contrast, Darwin (-1.2%) was the only city to regress during April.

Fixed Income

In April, the bond market remained range-bound despite concerns over fallout from banking developments in March. US short-term Treasury Bills declined due to uncertainty regarding the debt ceiling with further volatility expected over the next few months.

The Australian 2-year and 10-year government bond yields were relatively unchanged, only moving up 9bps and 4bps respectively. The Bloomberg Ausbond Composite 0+ Yr Index reflected a return of 0.2% for the month. The US 2-year and 10-year Government bond yields fell by 2bps and 5bps, respectively. In the United Kingdom, GILT yields rose due to resilient activity data and inflation surprises. The 2 Year Gilt yields rose 34bps and 10 Year Gilt yields rose 22bps. During the month, higher quality fixed income delivered strong performance as spreads remained narrow despite apprehensions about the economic outlook. The Bloomberg Barclays Global Aggregate Index (AUD Hedged) returned 0.4% for the month.

Key points – Economic

• Inflation appears to have peaked but is proving sticky so central banks may have more work to do to drive it down.
• RBA maintained the cash rate at 3.6%.
• Both the FEB and ECB maintained interest rates.

Australia

The RBA maintained the cash rate at 3.6% at its April meeting. The headline consumer price index for the first three months of 2023 came in at an annual rate of 7%, in line with expectations and slower than the 7.8% of the December quarter. March’s unemployment rate was static at 3.5%, with the economy adding 72,200 jobs. Retail sales rose 0.4% in March, with food sales rising for the 13th month.

The Westpac-Melbourne Institute Index of Consumer Sentiment for April rose to 85.8, buoyed by the pause in rate hikes by the RBA. Composite PMI rose to 53 in April with the rise in services offsetting the fall in manufacturing output. The NAB business confidence index came in at -1 with confidence appearing to have stabilised albeit below long run averages with deeper negatives in retail and wholesale.

The trade surplus increased to $15.3 billion in March, above the market forecasts of $12.65 billion.

Global

Inflation appears to have peaked in April but is proving sticky. While goods inflation has come down as the covid-era shortages have largely eased, services inflation and rising wage costs are complicating issues. Central banks may have more work to do to really drive down those inflation numbers. A lengthy period of sub-par growth may be required to tame inflation, meaning a pause is more likely than an outright pivot, barring any further financial instability.

Growth has been surprisingly resilient thanks in part to a resilient consumer, tight labour markets, a mild European winter and China re-opening post Covid-19. However, growth is predicted to slow as the year progresses, with the lagged effect of rising interest rates and cost of living pressures making their way through the economy.

US

The Federal Reserve maintained the cash rate at 5.00% in its April meeting. Inflation rose 0.4% in April, matching market expectations, and bringing the annual rate to 4.9%.

The US economy grew by an annualised 1.1% in Q1 2023, slowing from a 2.6% expansion in the previous quarter and missing market expectations of 2% growth.

Non-farm payrolls added 253,000 new jobs in April, beating forecasts of 180,000. The unemployment rate edged down to 3.4% in April, better than market expectations of 3.6%.

Consumer confidence fell to a nine-month low of 101.3 in April. Retail sales fell 0.6% month-on-month in March, with the annual rate increasing 2.3%.

The S&P Global Composite PMI rose to 53.4 in April, showing a solid upturn in both services and manufacturing activity. PPI increased 0.2% in April against market expectations of a 0.3% increase, with the annual rate easing to 2.3% and below the market forecast of 2.4%.

The balance of trade deficit narrowed to US$64.2billion in March, above the expected US$63.3 billion.

Euro zone

The Eurozone economy grew slightly by 0.1% in Q1 2023 after a flat fourth quarter but missed market consensus of a 0.2% expansion. The surge in consumer prices was due to the higher cost of energy and food, alongside the fastest pace of policy tightening by the European Central Bank in over 20 years and weakening confidence have taken a toll on the bloc’s economy.

The annual inflation rate came in at 7.0% in April, above the expected 6.9%, signaling that inflationary pressure remains high in Europe. Unemployment dipped slightly to 6.5% in March against expectations of 6.6%.

Consumer confidence increased 1.6 points to -17.5 in April. Retail sales dropped 1.2% in March, well below the forecast -0.1%. The annual rate came in at -3.8%, the biggest decline since January 2021.

The Composite PMI rose 54.1 in April, solely supported by an increase in services activity. PPI dropped 1.6% in March, slightly less than the expected 1.7% decrease, with the annual rate easing to 5.9% as expected.

UK

An unexpected 0.3% contraction in GDP in March sees the UK at the bottom of the G7 growth league behind Germany, France and the US. Strong growth in January meant the economy grew by 0.1% over the first quarter but was unable to prevent the UK economy being 0.5% smaller than it was in 2019 before the Covid-19 pandemic.

The UK will face a difficult situation going into the summer, with millions of households finding that lower gas prices will be offset by higher income taxes and a rise in mortgage costs.

Inflation unexpectedly rose 0.8% in March, bringing the annual rate to 10.1% and above the expected 9.8%. The rate remains above the 10% mark for a seventh consecutive period and the Bank of England’s 2% target for almost two years, suggesting policymakers might continue to raise borrowing costs further to rein in inflation.

Consumer confidence rose to -30 in April, exceeding expectations of -35. Annual retail sales fell 3.1%, matching market expectations.

The composite PMI index rose to 54.9 in April driven by services growth. Manufacturing contracted for the ninth month in a row.

PPI increased 0.1% in March, compared to the market expectations of a 0.1% decrease, with the annual rate easing to 8.7%, slightly below the anticipated 8.8%.

China

The Chinese economy grew by 2.2% on a seasonally adjusted basis in the three months to March, picking up from an upwardly revised 0.6% growth in the fourth quarter and matching market forecasts. The annual inflation rate fell to 0.1% in April, lower than the market estimate of 0.4%.

The unemployment rate declined to a seven-month low of 5.3% in March. Retail sales for March increased 10.6%, exceeding market forecasts of 7.4%.

Composite PMI declined to a three-month low of 53.6 in April, with both services and manufacturing noting softer rises in output than the previous month.

Asia region

The Bank of Japan maintained its key short terms interest rate at -0.1% at its April meeting. The bank also slashed its FY 2023 GDP outlook to 1.4% from 1.7%.

Inflation increased 0.3% month on month with the annual rate dropping slightly to 3.2% in March.

The unemployment rate rose to 2.8% in March, above the expected 2.5%.

The consumer confidence index rose to 35.4 in April, well above the market forecast of 32, as household sentiment strengthened across all indices. Retail sales in Japan increased 0.6% in March, with the annual rate rising 7.2%, exceeding the market forecast of 5.8%.

The Composite PMI was unchanged at 52.9 in April, with strong services growth offset by a sharp fall in manufacturing output.

Currencies

The Australian dollar (AUD) fell for the third consecutive month in April, closing -0.8% lower in trade weighted terms to 59.8 and depreciated relative to three of the four major currencies referenced in this update.

April’s trading range of the AUD/USD pair remained narrow at just 2.3 cents over the month, similar to the 2.2 cent range observed in March. Volatility throughout the month was primarily influenced by the RBA rate hike pause in April, in addition to strong domestic labour market reporting and weaker than expected CPI data released for the quarter.

Relative to the AUD, the Pound Sterling (GBP) led the pack in March, appreciating by 2.8%. Conversely, the Japanese Yen (JPY) was the laggard of the month, falling by 1.6% relative to the AUD. Year-on-year, the AUD remains behind the Euro (EUR), US dollar (USD), GBP and JPY by -10.3%, -6.3%, -6.2% and -1.6% respectively and is down -5.2% in trade weighted terms.

Important notice: This document is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No.421445 (Lonsec).

Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or limited to “General

Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. It is not a “personalised service” (as defined in the Financial Advisers Act 2008 (NZ)) and does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s).

Copyright © 2023 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This report is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this report may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This report may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.

Sherlock Wealth Pty Ltd is a Corporate Authorised Representative of Matrix Planning Solutions Pty Ltd AFSL & ACL No. 238256, ABN 45 087 470 200.

Month in Review as at February 2023

Index returns at end February 2023 (%)

Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated).

Key Points

• Equity markets had a challenging month with Australia’s S&P/ASX 200 Index retracing by 2.5%.
• Developed markets were slightly mixed with the S&P 500 Index (USD) returning -2.4% and European markets faring better, the FTSE Eurotop 100 Index (EUR) returning 1.5%.
• Asian markets suffered strong losses with the Hang Seng Index (HKD) finishing down -9.4% and the CSI 300 Index (CNY) down -2.1% following last month’s strong returns.

Australian equities

The month of February saw the S&P/ASX 200 Accumulation Index finish negatively after its strongest month on record in January. The main driver of the negative performance was the persistently high CPI figures in the US and the evaluation of earnings season in the Australian market. The Utilities (+3.4%) and Information Technology (+2.7%) were the top performers, whilst the Materials (-6.6%) and Financials (-3.1%) sectors were the biggest laggards in the month.

The Utilities and Information Technology sectors led all sectors as several companies reported robust earnings or positive corporate actions (i.e. Origin Energy). In contrast, the Materials and Financials sectors were the worst performers as concerns around the global macroeconomic outlook and policy response, coupled with the evaluation of earnings reports resulted in selloffs within these sectors. Investors continued to grapple with the inflation-driven interest rate outlook facing central banks globally and the implications that this may have on the future economic outlook.

Global equities

Resilient economic data in February resulted in a rise in bond yields and a decrease in equity markets. With renewed inflation concerns, US equities stumbled with the S&P500 declining 2.4% during the month.

The European Central Bank, Bank of England, and Federal Reserve announced rate hikes at the beginning of the month. The overall message from their accompanying statements was that inflation remains excessively high despite recent declines and that central banks must continue their efforts.

Economic data suggesting a postponed recession prompted investors to adjust their forecasts for the peak in interest rates and future rate cuts, given the potential lengthier route to target inflation.

Despite the typical positive correlation between robust economic data and stock market performance, equity markets had priced in anticipated rate cuts and were more dismayed by the possibility of reduced monetary easing than they were encouraged by the delayed recession.

Across the globe, a rebound of consumer confidence helped the Eurozone stay positive with the FTSE 100 returning 1.8% and the DAX 30 returning 1.6%, while the Hang Seng Index fell 9.9% driven by escalating geopolitical tensions.

Property

The S&P/ASX 200 A-REIT Accumulation index sold off in February after a strong start to the calendar year in January, with the index finishing the month -0.4% lower. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also regressed, returning -3.6% for the month. Australian infrastructure performed well during February, with the S&P/ASX Infrastructure Index TR advancing 1.9% for the month.

February was relatively quiet across the A-REIT sector. Some activity includes Centuria Industrial REIT (ASX: CIP) settling a $300mn convertible bond raising. The move enables CIP to secure debt at 3.45-3.95% while the cost of bank debt is 5.5%. The funds raised through this effort will primarily be used to pay off existing debts and for general corporate purposes.

The Australian residential property market experienced no change (0%) month on month in January represented by Core Logic’s five capital city aggregate. Melbourne (- 0.4%) and Brisbane (-0.4%) were the worst performers whilst Sydney (+0.3%) advanced during the month for the first time in twelve months.

Fixed Income

In a continued bid to reduce inflation to target levels, the Reserve Bank of Australia has raised the cash rate for a ninth month in a row, with a 25 bps increase announced in February. This brings the current February cash rate to 3.35%. Meeting minutes noted uncertain global outlook, upward surprises on inflation and wages, and the substantial increases in rates so far.

The bond market reflected the rate rise with yields rising over the course of the month. Australian 2Yr and 10Yr Govt Bond yields rose by 49 bps and 30bps, respectively, leading to the Bloomberg AusBond Composite 0+ Yr Index to return -1.3% over the month. The Australian CPI inflation over the year to December 2022 was 7.8%. Globally, fixed income markets were much the same. The US. Federal Reserve announced another 25bps rate rise on February 1, bringing the target cash rate to 4.5%-4.75%. US 2Yr and 10Yr Bond yields rose by 41bps and 69bps respectively. Similarly, U.K. 2Yr and 10Yrs Gilt yields rose by 61bps and 37bps, respectively, following the BoE decision to raise the Bank Rate by 50bps.

Key points

• This month marked the first anniversary of the Russian invasion of Ukraine.
• RBA increased the cash rate by 25%, taking it to 3.35%.
• Both the Fed and ECB raised interest rates in response to persistently high inflation.

Australia

The RBA increased the cash rate by 25bps at its February meeting, bring the rate to 3.5%. Annual inflation eased to 7.4% in January, below the predicted 8.1%, suggesting that inflation has peaked as the economy absorbs the record run of interest rate rises. The economy expanded 0.5% in the December quarter, below the anticipated 0.8%, with annualised GDP growth at 2.7%.

The unemployment rate rose to 3.7% in January, above the market estimate of 3.5%. Retail sales rose 1.9%% in January, above the 1.5% estimate, bouncing back from the nearly 4% fall in December.

The Westpac-Melbourne Institute Index of Consumer Sentiment for February fell to 78.5% as cost of living pressures and interest rate rises continue to weigh heavily. Composite PMI rose to 50.6 in February, returning to expansion after four months of contraction, supported by services activity growth. The NAB business confidence index rose 6 points to 6 in January, approaching its long-run average.

The trade surplus narrowed to $11.7 billion in January, below the market forecasts of $12.5 billion.

Global

February marked the first anniversary of the Russian invasion of Ukraine, with many nations providing military and humanitarian aid to Ukraine. Sanctions were also applied to Russia, which caused supply chain disruptions, especially in the energy sector.

The OECD updated its 2023 outlook, saying the global outlook is slightly better as food and energy prices are substantially lower than at their peaks. Inflation remains a risk, but the organisation expects central banks to continue to monitor this and adjust decisions.

US

The Federal Reserve raise the cash rate by 25bps to 4.75% in February, dialling back the size of the increase for a second straight meeting but still pushing borrowing costs to the highest since 2007.

Non-farm payrolls unexpectedly added 311,000 new jobs in February, well ahead of the 205,000 market forecast, led by gains in leisure and hospitality, retail and profession and business services. The unemployment rate rose to 3.6%, above market expectations of 3.4%.

Consumer confidence came in at 102.9 in February, against the revised reading of 106 in January. Retail sales jumped 3.0% month-on-month in January greater than the expected 1.8% increased, showing consumer spending remains robust after a slowdown last year, amid a strong labour market, wage growth and signs of easing inflationary pressures.

The S&P Global Composite PMI rose to 50.1 in February indicating a broadly stable levels if business in private sector firms. PPI increased 0.7% in January, above the forecast 0.4%with the annual rate increasing to 6.0%. Although this is the lowest number since March 2021, it is above the market forecast of 5.4%.

Balance of trade deficit widened to US$68.3 billion, below expectations and slightly weaker on the December revised result.

Euro zone

The ECB increased the cash rate by 50bps to 3.0% in its February meeting. Markets fully priced in this increase, with a chance of a similar hike to be delivered in May, after several policymakers backed the idea that rates will have to rise higher and stay higher for some time to bring inflation back to target.

The annual inflation rate came in at 8.5% in February above the expected 8.2%, signalling that inflationary pressure remains high in Europe.

Consumer confidence rose to -19 in February on expectations that inflation has slowed as the energy crises eased thanks to mild weather and the region would be able to avoid a recession this year. Retail sales posted a 0.3% increase in January, below market expectations and after a revised -1.7% in December, with the annual rate coming in at -2.3%. January’s unemployment rate came in at 6.7%, unchanged from December and above the market forecast of 6.6%.

The Composite PMI rose to 52.0 in February, pointing to further expansion in private sector business activity, With services activity the principal driver in this upturn.

PPI fell -2.8% in January, more than the expected -0.3% decrease, with the annual rate easing sharply to 15.0% well below the anticipated17.7%.

UK

The Bank of England raised rates by 50bps to 4.0% in February, pushing rates to the highest levels since late 2008 as the it tries to combat high inflation. Inflation eased to 10.1% in January, Below the market forecast of 10.3%. The Bank believes inflation has peaked and projects it to fall to around 8.0%t by mid-2023, and to around 4.0% towards the end of the year. Consumer confidence rose to -38 in February, well above market estimates of -43 and the highest reading in nine months. Retail sales increased 0.5% in January, beating marketing forecasts of-0.3%. The annual rate decreased 5.1%, better than the -5.5% forecast but still pointing to a general trend of decline.

The composite PMI index fell rose to 53.1 in February, signalling a solid increase in private sector output.

PPI rose 0.5% in January, above the market estimate of a 0.1% rise, with the annual rate increasing 13.5%, slightly above the anticipated 13.3%.

China

Economic activity in China expanded sharply for a second straight month, in an early sign the country may be shaking off the impact of pandemic curbs sooner than expected. The IMF upgraded its growth forecast for China to 5.2% in 2023 and predicted that China would contribute around a third of global growth for the year. The annual inflation rate fell to 1.0% in February, below the market forecast of 1.9%, as customers remained cautious despite the removal of zero COVID policies.

The unemployment rate was level at 5.5% in January.

Composite PMI jumped to 54.2 in February, supported by a renewed rise in manufacturing output and a sharper gain in services activity.

Balance of Trade came in at a $116.88 billion surplus for January-February, far ahead of expectations and up on the previous surplus of $78 billion in December.

Asia region

The Bank of Japan maintained its key short terms interest rate at -0.1% at its February meeting.

Inflation increased 0.4% month on month and 4.3% annually in January, the highest level since December 1981, amid continuing higher prices for imported raw commodities and a weakened yen.

The unemployment rate fell to 2.4% in January, marginally below the 2.5% forecast.

The consumer confidence index in Japan increased marginally to 31.1 in February as the economy recovered further from pandemic disruptions, with households’ sentiment strengthening for both income growth and employment. Retail Sales in Japan rose 1.9% in January, far higher than the market consensus of a 0.3% rise, with the annual rate rising 6.3%, topping the market forecast of 4.0%.

The Composite PMI rose to 51.1 in February, with services activity growth accelerated to an eight month high.

Currencies

The Australian dollar (AUD) retreated over the month of February, closing 1.6% lower in trade weighted terms to 61.4. In contrast to January, the AUD depreciated relative to all four major currencies referenced in this update.

Volatility over the month expanded as positive risk sentiment brewing in January reversed. Greater resilience in the global economy coupled with stronger than anticipated economic data have moderated views of an imminent recession. This is somewhat bittersweet news as a lack of economic correction suggests that inflation may be stickier and more difficult for central banks to grapple in the short term.

Relative to the AUD, the US dollar (USD) led the pack in February, appreciating by 4.2%. Conversely, the Japanese Yen (JPY) was the laggard of the month, albeit with a positive relative return of 0.1%. Year-on-year, the AUD remains ahead of the JPY and the Pound Sterling (GBP) by 9.9% and 3.1% respectively. However now trails both the Euro (EUR) and USD by -1.6% and -6.9% respectively.

Important notice: This document is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No.421445 (Lonsec).

Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. It is not a “personalised service” (as defined in the Financial Advisers Act 2008 (NZ)) and does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s).

Copyright © 2023 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This report is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this report may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This report may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.

Sherlock Wealth Pty Ltd is a Corporate Authorised Representative of Matrix Planning Solutions Pty Ltd AFSL & ACL No. 238256, ABN 45 087 470 200.