January Snapshot
Key points
- 2023 turned out to be a strong year for investors with shares and bonds rallying on the back of falling inflation, the anticipation of interest rate cuts in 2024 and better than feared economic growth. There were bumps along the way, but balanced super funds returned around 9.5%.
- 2024 is likely to see positive returns helped by falling rates but they are likely to be more constrained and volatile given risks around the timing of rate cuts, recession risks and geopolitics. The risk of recession in Australia is around 40%.
- We expect the RBA to cut the cash rate to 3.6%, the ASX to rise to around 7900 (revised up) and balanced super funds to return around 5.3%. Australian residential property prices are likely to soften ahead of support from rate cuts.
- The key things to watch are: inflation and rates; the risk of recession; China; US politics; and the Australian consumer.
