Renewed hopes that the United States Federal Reserve was close to a “pivot” on policy tightening (and that they would signal a slower pace of interest rate increases) sparked a rally in United States and Australian share market values in the month of October.
The Australian share market as measured by the All-Ordinaries index gained 5.6% for the month, closing at 7,054.8 points. The Australian Dollar was steady (as at the end of October), with 1 Australian Dollar currently buying 64.02 United States cents.
While the Reserve Bank of Australia (RBA) once again increased the official Cash Rate last month, the 0.25% per annum increase in October came somewhat as a surprise (with the market expecting a higher 0.50% per annum increase). The RBA Cash Rate now stands at 2.60% per annum and is tipped to increase again today following the RBA board meeting.
Global share markets returns were somewhat mixed in the month, with the United States Dow Jones Index gaining 14.0%, the London FTSE gaining 2.9%, the Japan Nikkei 225 gaining 6.4%, and the Hong Kong Hang Seng Index once again falling sharply by 14.7% in October (after declining by 13.7% in September).
Late in the month, the Federal Government handed down the October Federal Budget for the 2022/23 financial year. As expected, Labor’s first Budget was filled with measures aimed at easing the cost of living over the coming years, addressing the challenges of a slowing economy, and introducing investments designed to place Australia in a stronger position for the future.
For superannuation and tax, the announcements were mainly recommitments from earlier Federal Budgets. This includes the change to the eligibility age for downsizer contributions. The stage 3 tax cuts to commence from 1 July 2024 are also unchanged at this stage.
Instead of focusing on superannuation and tax, most of the proposals centred around investing into key sectors and infrastructure, and providing affordable housing for more Australians through a new national Housing Accord.
Some of the key proposals from the Federal Budget include:
- Increased support for families via an increase to child care subsidy rates and expansion of paid parental leave to 26 weeks by 2026.
- Federal and State governments will work with super funds and other institutional investors to provide more Australians with access to affordable housing through a national housing accord.
- Reconfirmation that the minimum age for making downsizer contributions into super will be lowered from 60 to 55.
- Increasing Commonwealth Seniors Health Card income thresholds.
- Allowing pension age Social Security recipients to earn more from employment before their payment is impacted.
- More favourable Centrelink assessment of home sale proceeds.
- Energy-efficiency grants for small and medium-sized businesses, and increased FBT exemptions for low-emission vehicles.
Importantly, the Federal Budget announcements are not yet law and require the safe passage of enabling legislation to be enacted in their proposed forms. This means they may be subject to delay, change or defeat. However, if you have any questions in relation to the announcements, please don’t hesitate to contact us.
For more information, please contact Ryan Love on 1300 856 338.
This article is general information only and is not intended to be a recommendation. We strongly recommend you seek advice from your financial adviser as to whether this information is appropriate to your needs, financial situation, and investment objectives.