January: Strong Start to the Year
- All the talk was on the US leadership with Donald Trump taking office on the 20th of January and with the Chinese firm DeepSeek releasing a new chatbot artificial intelligence (AI) model.
- Australian shares returned +4.6% over the month with the index reaching an unprecedented high of 8,532 in late January, the Small Cap market rebounded up +4.2% after returning -3.1% in December.
- Global Shares on a hedged basis was up +3.5%. Global Shares on an unhedged basis gained +2.7%. US shares were up but lagged other regions with European shares the standout performer over the month.
- Global small caps had a positive month returning +2.7% on the back of future rate cut expectations and some profit taking.
- Global emerging markets returned a modest +1.0% after a strong November with Colombia the top-performing region, with India being the worst performing region related to growth concerns.
- Property and Infrastructure after negative returns over November the Global listed property (hedged) sector returned +1.6% and Listed Infrastructure (hedged) sector +0.7% over the month.
- Fixed income was up due to positive news on inflation with Australian bonds returning +0.2% and global bonds returning +0.4%.
- The Australian dollar AUD was up slightly against major currencies except for the Yen. Most notably, the AUD was up 1.3% against the British pound over the month.
Job Market:
U.S.
- The annual unemployment rate in January fell to 4.0% down from 4.1% in December last year, which reveals a moderating yet healthy US labour market.
- U.S. Non-farm payrolls rose by +143,000 in January, below the 169,000 forecast and well below the gains seen in November 2024 (+261,000) and December 2024 (+307,000).
- Labour force participation ticked up slightly over January at 62.6%.
Locally
- The Consumer Price Index (CPI) in Australia came in at 2.4% year on year (yoy) to December 2024 falling from 2.8% yoy for the September quarter. The largest quarterly increases came from Education (+6.5%), Alcohol and Tobacco (6.2%) and Insurance and Financial Services (+5.4%).
- Australia’s seasonally adjusted unemployment rate rose slightly by 0.1% to 4.0% in December 2024 due to a rise in new job seekers. Australia’s labour participation rose by 0.2% to a record high of 67.1% in December 2024.
Major Asset Class Performance (%)
Source: Lonsec iRate, Rhombus Advisory, 31 January 2025
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Listed Infrastructure (hedged); FTSE Global Core Infrastructure 50/50 NR Index (AUD Hedged) Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD
Please note: Past performance is not indicative of future performance.
Currency Markets
Source: Lonsec iRate, Rhombus Advisory, 31 January 2025
All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance.
