UGC’s Monthly Market Update – June 2023
Welcome to the UGC’s Monthly Market Update for June 2023.
Join UGC’s CEO & Chief Investment Officer, Joel Hewish, as he takes a deep dive into the latest financial market trends and conditions for the US and Australia, as well as providing an in-depth analysis of the stock markets.
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KEY POINTS:
MARKET OVERVIEW – US
- Record weekly inflow to tech, showing idiosyncratic rally and not structural.
- Poor market breadth is not a sign of a bull market.
- Low volatility and new high in S&P 500.
- S&P 500 Index earnings outlook mixed for FY23.
- Eurozone in a mild recession.
OVERVIEW – AUS
- RBA raised interest rates on 6 June from 3.85% to 4.10%. Many economists now expect rates to increase at least another 2 times.
- Australian economic growth is approaching stall speed, rising just 0.2% for the March quarter.
SUMMARY
- Narrow, tech-focused leadership again this month with Mega Cap technology companies lifting the indexes, but everything else still lacklustre. Short term these stocks are overbought.
- More stocks are basing and some breakouts occurring and holding and volatility contracts, but still need a significant improvement in the number of stocks setting up before we get more aggressive.
- Economic growth is slowing across the globe, but employment data remains healthy. If a recession comes in Australia and US, we’re hopeful it’s a mild one.
- Markets approaching period of seasonal and cyclical weakness between late July and October/November, this could provide the final shake out in stocks. If Europe is an indicator, stocks don’t have to go to new lows even if a recession in Australia and US occurs.
- We remain cautiously optimistic but continue to have one foot at the door to re-apply hedges if market starts to decline again.
