IMFG Webinar – Perspectives on Markets and the Federal Budget

Market and Economic Update

Presenter: Dr Steve Garth, Independent Chair of IMFG’s Investment Committee

Key Themes

• Global markets continue to be heavily influenced by inflation expectations, interest rates, and geopolitical uncertainty.
• Rising oil prices are an important contributor to inflation pressures globally.
• Australian share markets have experienced volatility during the year, although movements remain broadly within normal historical ranges.
• US equity markets have performed more strongly than Australian markets, largely driven by major technology and artificial intelligence-related companies.
• Bond markets continue to reflect changing inflation expectations and uncertainty around future economic growth.

Interest Rates and Inflation

• Inflation remains a key concern for central banks.
• The Reserve Bank of Australia may maintain a cautious approach to interest rates while inflation pressures remain elevated.
• Higher interest rates can place pressure on households and businesses but also increase income available from cash and fixed interest investments.

Market Perspective

• Short-term market volatility is normal and should be expected.
• Political events and federal budgets often have more impact on individuals than on overall investment markets.
• Long-term investment outcomes are generally driven more by economic fundamentals than short-term political cycles.