Investment markets continued their recovery in May. The S&P ASX 200 rose 0.8% to close at 8,731 points, while the Australian dollar weakened slightly by 0.3%. The Reserve Bank of Australia also increased interest rates again, taking the cash rate to 4.35% per annum, a level not seen in over a decade and continuing to pressure borrowing capacity.

Global markets delivered solid, but uneven, returns. The US market (S&P 500) gained 5.1%, while Japan surged 11.9%. The UK rose a modest 0.3%, and Hong Kong declined by 2.2%. The resilience in US markets follows a strong April, reflecting improved investor sentiment as geopolitical concerns eased.

Hopes for a resolution to the conflict in the Middle East helped stabilise global investment markets in April. In Australia, the S&P/ASX 200 Index rose 2.2% over the month to close at 8,665.8 points.

The Australian dollar also strengthened, rising 4.5% to around USD 0.72. The Reserve Bank of Australia did not meet during April, however market expectations remain that interest rates could stay higher for longer given ongoing inflationary pressures..

Ongoing conflict in the Middle East unsettled global investment markets in March, leading to a broad sell‑off across share markets. In Australia, the S&P/ASX 200 Index fell 7.8% to close at 8,481.8 points, marking its largest monthly decline since June 2022.

The Australian dollar weakened by 3.1% over the month to around USD 0.69. At the same time, inflation pressures remained higher than expected, prompting the Reserve Bank of Australia (RBA) to increase the cash rate by a further 0.25% per annum to 4.10% per annum.