Economics

Highly anticipated new consumer price data showed the inflation rate in Australia hit its highest level since 1990 in the December quarter. But analysts are mixed on whether inflation will moderate later this year or become more entrenched.

The market view is still too optimistic, according to the BlackRock Investment Institute, and investors aren’t truly considering the risk of a recession.

The Australian mining and energy sector drew a significant increase in investment in 2022, but a hoped-for green mining boom is currently a fantasy, with gas and coal still dominating the project pipeline, new bank research shows. A shift in focus to commodities needed for the energy transition would have to precede another super-cycle, but select opportunities exist.

The US economy should experience a “benign disinflation” over the next six months as pandemic-infused snarls unravel. That should mean good things for stocks, at least in the short term.

Credit and equity markets both suffered a very bad 2022, as the collapse of negative correlation between stock and bond prices left no safe haven for investors. But 2023 could be a big year for bonds, and experts say investors waiting on the sidelines risk missing out.

A recent survey shows 74 per cent of Australian business leaders expect profits to increase in the year ahead, despite a still-challenging outlook and sticky inflation.

New data shows Australian house prices have dropped 8.4 per cent since their peak in May 2022, the largest decrease on record. While further RBA rate hikes could deepen the downturn, experts say a crash in 2023 is not inevitable.

Green shoots of relief from central banks will take some time to filter into the economy due to a confluence of factors according to Sage Capital.

After a dip in October, the inflation rate is back to a 30-year high, according to ABS statistics for November that put into doubt hopes the Reserve Bank of Australia will pause rate hikes soon.

Household wealth in September recorded its third largest quarterly decline since the Australian Bureau of Statistics began keeping records in 1989. And wealth is likely to keep falling in the coming quarters, as the lagged effects of interest rate hikes flow through.

This year’s recalibration of bond prices now reflects the higher interest rate environment, making future returns attractive again for fixed income in 2023 as deteriorating fundamentals threaten other asset classes.

Recent research reveals high-net-worth investors have reduced slightly in number since last year while accumulating slightly more investable assets, with this cohort taking a “more subdued outlook” for the coming year. Investors’ asset class preference is also evolving to favour defensive investments.