UGC’s Monthly Market Update – April 2023

Welcome to the UGC’s Monthly Market Update for April 2023.

Join UGC’s CEO & Chief Investment Officer, Joel Hewish, as he does a deep dive into the latest market trends and conditions for the US and Australia, as well as providing an in-depth analysis of the stock market.

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KEY POINTS:

MARKET OVERVIEW – US
  • Average S&P 500 return around recessionary bear markets since 1871.
  • 2023 will likely see earnings (EPS) contract.
  • Could this be the first recession to be ignored since 1945?
  • Market now pricing in a US rate cut by middle of the year.
  • ISM PMI (purchasing manufacturing index) vs S&P 500 EPS Growth
  • Recession expectations for the next 12 months.
  • U.S. Consumer Price Index (YoY%)
MARKET OVERVIEW – AUS
  • Australian Interest Rate Futures: Are we at the peak?
  • Australian Interest Rate Yield Curve is Now Inverting.
  • Lending for housing is back to pre-pandemic trend.
STOCK MARKET CONDITIONS – US
  • Rally in US growths stocks has been narrow.
  • S&P 500 Cycle Composite for 2023.
  • Volatility is starting to decline and moderate.
  • Sentiment is starting to get to extremes.
  • Previous years when S&P 500 Q1 returns were >7%.
SUMMARY

1. We continue to see a dichotomy between what the fundamentals suggest and what the technical suggest.
2. Strong Q1 performance and technical suggest a strong performance for the rest of year.
3. To achieve a strong performance we will need the markets to ignore a recession for the first time since 1945 and a corporate earnings recession.
4. Recessionary risks are high in the US and rising in Australia.
5. We remain cautiously optimistic but continue to have one foot at the door to reapply hedges if market starts declining again.


GENERAL ADVICE AND PAST PERFORMANCE WARNING

This article has been prepared by United Global Capital Pty Ltd (ACN: 154 158 273, ABN: 25 154 158 273, AFSL: 496179).

This article contains general information only and is not intended to provide any person with financial advice. It does not take into account any person’s (or class of persons) investment objectives, financial situation or particular needs, and should not be used as the basis for making any investment or financial decisions. United Global Capital Pty Ltd does not make any representation as to the accuracy, completeness, relevance or suitability of the information, conclusions, recommendations or opinions contained in this article (including, but not limited to any forecasts made). No liability is accepted by United Global Capital Pty Ltd or its directors, officers, employees, agents or advisors for any such information, conclusions, recommendations or opinions to the fullest extent possible under applicable laws.

Anyone considering making any investment decisions based on the information contained in this presentation should note that past performance, target returns or estimates of returns is not a reliable indicator of future performance and actual results can vary significantly.

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