The Australian share market continued its run of gains in the month of June, with the All-Ordinaries index closing the month 2.4% higher at 7,585.0 points. For the full financial year, the All-Ordinaries index gained a staggering 26.4%, the best financial year return in 34 years!
The Reserve Bank of Australia (RBA) held the official Cash Rate at 0.10% per annum in June. The RBA board meet again next Tuesday, with no rate change expected. The Australian Dollar fell by 3.2% in the month, with 1 Australian Dollar buying 74.99 US cents.
Global share market returns were generally weaker in the month of June, with the United States Dow Jones index falling by 0.1%, the London FTSE gaining by 0.2%, the Japan Nikkei 225 falling by 0.2% and the Hong Kong Hang Seng Index falling by 1.1% for the month.
As greater Sydney, south-east Queensland, Darwin, Alice Springs and Perth are all now in lockdown to stop the spread of the COVID-19 delta variant, it is worth reflecting where Australia sits in terms of COVID-19 case numbers relative to other nations.
Source: https://www.worldometers.info and https://ourworldindata.org
As noted in the above table, Australia currently has 0.0013% of “active” COVID-19 cases relative to our population. This includes returned travellers in hotel quarantine. Ironically, the United Kingdom eased their COVID-19 restrictions in late June, with a further easing of restrictions to come in mid-July. This is despite the “active” COVID-19 cases in the United Kingdom being some 392x higher relative to the population of Australia.
In the United States, most of the 50 states have eased COVID-19 restrictions, with only some states requiring masks indoors for persons who are not fully vaccinated (refer: https://www.nytimes.com).
As I wrote in my April newsletter, without an improvement in the Australian COVID-19 vaccination rate, we run the risk of further snap lockdowns. Sadly, most of the Australian population are experiencing this right now, while our elected leaders wrangle over the effectiveness of the vaccination rollout.
At some stage in the future (and presumably once the vaccination rate improves to the levels of the United Kingdom and United States), for the sake of our economy (and, in particular, for those casual hospitality workers and the tourism industry who are most impacted) our state leaders may need to change their COVID-19 response from eradication to mild acceptance. Otherwise, we do run the risk of continuing to rack up government debt, while the rest of the developed world returns to a “COVID normal” situation of free movement.
In superannuation news, please note that as we enter the 2021/22 financial year, the Superannuation Guarantee rate increases from 9.5% to 10%. In addition, the superannuation concessional contribution limit and non-concessional contribution limits increase to $27,500 and $110,000 per financial year respectively.
In addition, legislation was passed in late June to enable aged persons under 67 as of 1 July in a financial year to access the “bring-forward” non-concessional contribution rules (effectively enabling an individual to contribute up to $330,000 to superannuation in a financial year as a non-concessional contribution). This was previously limited for persons under age 65.
The above changes to superannuation may present an opportunity to review your financial strategy. Please contact Ryan Love on 1300 856 338 if you wish to discuss, or if you would like more information.
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.