June 2023 Update
With one day of trading left for current financial year, we can look back over the last twelve months as a positive on the ASX.
The last twelve months has seen the ASX up 7.4%. Before we get too excited, it is important to remember there was a massive sell off in June 2022 with the All Ordinaries falling nearly 10%, so the last year was starting from a pretty low base.
The 5 year chart below shows that ASX has gone sideways since July 2021 with a lot of ups and downs along the way.
Inflation / Recession
The high levels of inflation has seen the RBA increase interest rates to 4.1%, inflicting the most pain in the world on mortgage holders. Interest repayments have increased by some 130% over the last year. Rates will not go down any time soon because inflation had remained around 7% for most of 2023. The good news is that inflation numbers for May has just come in at 5.6%. This is promising and it will be interesting to see the outcome of next week’s RBA meeting.
I commented in a previous update that I hoped people would not lose their jobs. This hasn’t happened en masse as yet and I still hope it doesn’t. Unfortunately, we are seeing mortgage stress which is when 30% or more of a households income is spent on a mortgage. This is already leading to homes being lost.
A technical recession in Australia would not surprise. This is defined as two consecutive negative quarters of growth in real GDP. The latest available data suggests we have just come out of a retail recession as inflation and higher interest rates erode the buying power of consumers. This may be short lived because retail spending was up with consumers taking advantage of larger than usual promotional activity and sales.
Let’s face it, life is very expensive. Two beers at the pub cost me $27 recently. That’s un Australian! Sydney CBD is crying out for workers to return to offices as there just aren’t enough people travelling to the CBD to support small businesses. But what can they do as mortgages bite and everything is expensive? It would appear you cannot have your beer and drink it too!
When recessions have occurred previously, share markets typically retreat. We have seen a late June sell off but the Australian market has been quite resilient as the economy has been surprisingly strong. Unemployment has remained near historic lows and the housing market has coped thus far.
Around the globe
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Our trusted neighbours, albeit enemies on the sport’s field, New Zealand, has entered a technical recession. NZ has lifted interest rates to 5.5% to combat inflation which reached 6.7% in March
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Spare a thought for Türkiye (aka Turkey). Interest rates just jumped from 8.5% to 15% which has acknowledged that the inflation level near 40% was out of control and lending had to be reined in.
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China has actually lowered prime interest rates to 3.55% as Beijing seeks ways to boost economic growth, which has been slow as they recover from pandemic lockdowns and supply chain bottlenecks.
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The USA Federal Reserve left rates at 5.25% and has seen inflation down to 6.7%
Pension Changes
In good news, the Centrelink Age Pension thresholds will increase on 1 July.
Full Age Pension assets threshold increases by:
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Single homeowners threshold $301,750, increase is $21,750
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Single non-homeowners threshold $543,750, increase is $39,250
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Couple homeowners combined threshold $451,500, increase is $32,500
Couple non-homeowners combined threshold $693,500, increase is $50,000
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Upper (Disqualifying) asset threshold increases by:
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Single homeowners threshold $656,500, increase is $21,750
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Single non-homeowners threshold $898,500, increase is $39,250
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Couple homeowners combined threshold $986,500, increase is $32,500
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Couple non-homeowners combined threshold $1,228,500, increase is $50,000
Cyber Security
You may have heard of the Optus data breach, the Medibank Private data breach and the Latitude data breach as they have all been reported in the media.
Unfortunately data breaches, hacking or scams are common place these days but we can all play a part in trying to reduce the risks.
As you would expect, here at Your Wealth Financial Services, we take data security seriously.
With the help of our IT support provider we took steps to protect our systems but like most things in life the hackers methods are constantly changing.
We have engaged the services of a dedicated cyber security firm to assess our vulnerability to cyber-attack and to help us identify areas that we can improve and implement change as required.
The process is very involved and requires analysis of our systems and procedures and while initial feedback has been encouraging, we are certain there will be areas that will require modification and updating to try and stay on top of things.
If you haven’t been affected by a data breach, I am sure you will know of someone who has and possibly someone who has been involved in all three of the abovementioned breaches.
So, what sort of things can you do to try and protect yourself?
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Be wary of all emails, not just the ones from unknown people/businesses
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Start off with a strong password or passphrase
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Consider using 2 factor or multi-factor authentication
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Install anti-virus and malware protection
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Back up your data
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Make sure your Wi-Fi connection is secure
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Lock your computer, tablet or phone when you’re not using it
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Don’t leave your computer, tablet or phone unattended when out in public and avoid public Wi-Fi
If you need help with any of the above and you have grandchildren, ask them as they are usually well versed in technology.
Boiled Lollies!
Sadly, Fantales are to be no more. It is true, kids do not like them.
Anyone who has managed to get their hands on a bag or two is making the most of it – with sellers taking to Facebook Marketplace and eBay to hawk single packets of Fantales for as much as $80 a pop, or $2000 for a box of 10. Production will continue until July if you can get your hands on them.
