Investment update – December quarter 2022

Positive gains for all First Super investment options.

Here’s a look at what happened in investment markets in the December quarter and what that meant for your superannuation.

The big picture

Central banks continued to raise interest rates amidst high inflation, though increases were smaller than in previous months.

In the US, investment banks and major tech companies like Google, Microsoft and Amazon cut jobs a result of a slowdown in demand for their services post-Covid 19 and uncertainty about future economic conditions.

Back home, December’s retail sales numbers were the weakest since June 2022. This was off the back of 11 straight increases and a huge shopping splurge in November on Black Friday sales and Christmas shopping.

Australian financial markets speculated about the Government’s intervention on energy prices. Global sentiment was similarly unsettled, with question marks around whether China would reopen its economy by easing Covid-19 restrictions (it did in December), and the ongoing impacts of the war in Ukraine. On top of that was (another) new Prime Minister in the UK, with Rishi Sunak selected in October to replace Liz Truss, who sent financial markets reeling with a series of policy announcements lasting only 6 weeks in office.

The word ‘recession’ started to appear more frequently in financial media as economists debated its likelihood as the world looked towards 2023.

A rally in share markets

The Reserve Bank of Australia (RBA), like other central banks, raised interest rates each month over the quarter. The RBA increased the cash rate by 0.25% each time, making it eight consecutive interest rate hikes.

These rises were expected and had already been priced into the market, and major share markets rebounded over October and November. The Australian All Ords and US Dow Jones rallied but started to lose ground towards the end of the year.
Listed real assets, property and infrastructure produced positive returns in October and November, but declining house prices, rising bond yields, and a slowing economic outlook, created headwinds on these investments.

Positive results for First Super investments

Higher interest rates can be beneficial to some defensive assets your super is invested in, such as cash and term deposits. But it can weaken growth assets like equities and infrastructure and property, where high interest rates cause valuations to decline.
All these assets are represented in various mixes in the different investment options that First Super offers. In good news for members, all five investment options produced positive returns overall for the October to December quarter.

More information

Check the latest investment returns on our Crediting rates webpage.

To discuss your investments in more detail, you can contact us on 1300 360 988 or by emailing mail@firstsuper.com.au.

 

Issued by First Super Pty Limited (ABN 42 053 498 472, AFSL 223988) as Trustee of First Super (ABN 56 286 625 181).

Past returns are not an indicator of future returns.

This article contacts general advice which has been prepared without taking into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you or read the Product Disclosure Statement (PDS) before making any investment decisions. To obtain a copy of the PDS or Target Market Determination, please contact First Super on 1300 360 988 or visit our website at firstsuper.com.au/pds.