Market Monitor - end June 2023

IMAP Ashley Owen Market Monitor

Synopsis: a quick snapshot of what’s happening in local and world investment markets, and implications for Australian investors.

Welcome to our Market Monitor - a quick snapshot of key events affecting investors and investment markets, especially from an Australian perspective.

In the upper section of the chart below we show Australian shares (All Ordinaries index in green) and US shares (S&P500 index in red), since the start of 2020.

What stands out immediately is the fact that local Australian market almost always follows the US market up and down, regardless of local conditions. (This has always been the case - rare exceptions being the US ‘panic of 1907’, where the Australian market did not fall with the US, and the 1951-2 Korean War inflation spike, when the Australian market fell but the US did not).

Although the Australian share market mirrors the US market in direction almost all of the time, the extent of the relative booms/busts do vary in each cycle. In the current cycle, the US market had a much stronger rally from mid-2020 to early 2022 (Covid stimulus/lockdown tech/online frenzy), and again the rally from late 2022 to now (the current ‘A.I.’ frenzy).

Australia’s tech rallies are much more muted as we only have a very small tech sector here. 

By  Ashley Owen, CFA

Ashley Owen, CFA  Founder & Principal of Owen Analytics
US and AUS shares correlation since 2020

Share markets

June 2023 was a strong month for global share markets, which rose +5% overall. All sectors were up across the board for the first time since last November.

Investors bought up shares everywhere on renewed hopes of ‘soft landings’, as jobs and spending remained relatively strong, and inflation continued to recede.

The best global share sectors in June were ‘cyclicals’ – discretionary spending (eg. Tesla +28%, Toyota +21%), industrials (Caterpillar +20%, and gains in most stocks), materials (Sherwin Williams +16%, Shin-Etsu Chemical +11%), fossil fuel producers (with rising oil and gas prices), and banks. US tech/online stocks kept soaring in the A.I. frenzy (Adobe +17%, Nvidia +12%).

All major countries were up, led by Japan (with a weakening yen, and Softbank +23%).

For the 12 months to June 2023, global share markets in aggregate (MSCI ACWI) ended up +14.4%, or +17.1% including dividends. All sectors were up except real estate and utilities.

The best sectors were tech, industrials, consumer discretionary, banks, fossil fuels, and telco/comms, which were all up strongly for the year.

Australian shares were up more modestly in June, mainly held back by falls in CSL, Transurban, ASX, gold stocks and property trusts.

The big banks posted modest gains for the month as recession fears eased; the big iron ore miners rose on higher iron ore prices and Chinese stimulus measures; fossil fuel producers rose with oil & gas prices on renewed hopes of soft landings; but gold miners fell back with lower gold prices.

For the 12 months to June, the local share market (ASX300) ended up +9.4%, or +14.4% including dividends, and +16.2% including franking credits, putting the local market almost on a par with the global market aggregate for the year.

All sectors here were up here - the best were tech and utilities (AGL shenanigans), iron ore miners, fossil fuel producers, all of the big-5 banks were up except NAB, and all of the big health stocks were up except Ramsay.

How long can the current global share rally last? – see our story ‘Are we there yet? – on rate hikes’


In June - oil & gas prices rose, along with iron ore and copper – lifted by hopes of soft landings (or shallow recessions at worst).

Gold prices were down as bank crisis fears eased. Gold had rallied in March this year, not as an inflation hedge (inflation has been receding) but as a safe haven in the Swiss/US regional bank crisis (Bitcoin also rose for the same reason in the bank crisis). In the 12 months to June – most commodities prices were down, especially fossil fuels – with global slowdown fears and recessions in Europe.

Gold was up a fraction over the 12 months, but has once again failed to provide its much-touted inflation hedge. (Gold rose when inflation was negative in 2020, but then fell as inflation peaked in 2022).

Aussie dollar

In the upper section of the chart we also show the AUD/USD exchange rate. As a ‘risk’ currency, the Aussie dollar generally mirrors the direction of the local share market, and this is clearly evident in the chart.

The AUD fell heavily with shares in the 2020 covid sell-off, then rebounded with shares in the Covid stimulus rally to early 2021, fell with shares to late 2022, and then has stayed more or less flat, like Australian shares, in the 2023 US tech/online rally.  

Interest rates

In the lower section of the chart, the dotted lines show short term interest rates in both markets, the circles highlight interest rate cuts and hikes, and the solid lines show yields on 10 year government bonds (Australia green, US red). 

In June 2023, the RBA made its 12th rate hike to 4.1%, specifically referring to the Fair Work Commission's 5.75% wage rise in the prior week as a key reason for the need to keep hiking interest rates to slow spending, with wages rising without gains in productivity. Australian rate hikes have been later, slower, and lower than US rate hikes, so it is no surprise that Australia still has higher inflation than the US.

The US Federal Reserve hit the pause button in June after its 10th rate hike in May, but it also warned of further rate hikes ahead. (see ‘Are we there yet? – on rate hikes’ )

Inflation continued to ease in most markets in June, but gathering fears of entrenched inflation saw bond prices fall, resulting in bonds posting had another negative month as bond yields rose in Australia, US, UK, but were mostly down a little in Europe with the recession there.

For the 12 months to June, bond markets posted nil to slightly negative returns as bond yields rose around the world, especially UK, Europe, and the US. (Returns on bond markets in 2022-3 were virtually zero, but better than the double-digit, worst-in-a-century losses for bonds in the prior 2021-2 financial year).

For longer term returns on bonds and other asset classes see ‘The BIG picture’ 

Another key development for the month was the failed military mutiny on 23-24 June by Yevgeny Prigozhin, leader of Wagner group’s mercenary army fighting Putin’s war on Ukraine. The crisis lasted just 24 hours, but it signalled a possible acceleration of the end of the war, and this prospect boosted share markets late in the month. On the other hand, the crisis also raised fears that a cornered and isolated Putin may resort to desperate measures (like the cornered and isolated Hirohito in late 1941).

Watch out for our next round-up of investment markets at the end of July 2023 !


This article is written by Ashley Owen, CFA and the views expressed are his own.

Ashley is a well known Australias market commentator with over 40 years experience.

Formal qualifications:
• LLB, LLM - University of Sydney
• BA (economic history, international relations) – Deakin University
• Grad Dip, Applied Finance & Investment - Securities Institute of Australia (FINSIA)
• CFA Charter – CFA Institute

Membership & associations:
• CFA charter holder
• Signatory to the UN Principles for Responsible Investment
• Occasional member, Education Advisory Board Working Committee of the CFA Institute (US)

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