CFS Market Update: July 2024 

•  The RBA once again held rates steady at 4.35% in August 
• The US Federal Reserve (Fed) and the European Central Bank (ECB) also kept its rates unchanged 
• The ASX200 lifted to all-time highs in July, thanks to the major banks 
• The start of August saw Japan stocks rebound strongly, after a market shock that seemingly caused a ripple effect across global markets, including Australia. 

If you want to understand the August market event in more detail, you can read our latest article, What goes down, must go up. Remember, it’s important to stay calm during short term market instability. 

Previously, the RBA spared Australians from a rate hike at its June meeting, having hinted at the possibility in its board minutes. 

In its August meeting, the interest rate was left unchanged at 4.35%, where it has remained steady since November 2023. The RBA will next meet on 23-24 September. 

The Fed once again kept its rates steady at 5.25% to 5.5% at its 31 July meeting, stating that while inflation has eased over the past year, it remained somewhat elevated. Its next meeting will take place on 17-18 September. 

On 18 July, the European Central Bank (ECB) kept its three rates unchanged. However, experts are anticipating a rate cut to take place on 12 September.  

There are three more interest rate decisions left in the year for these three central banks. 

During July, Australian stocks delivered strong performance where the major banks did a lot of the heavy lifting, in addition to shares in retail companies as the government’s Stage 3 tax cuts kicked in. 

US shares were also mostly higher during the month. The key theme was the rotation out of big tech, growth and momentum stocks into small caps, value and cyclical companies. 

The US Federal Reserve has the opportunity to reduce interest rates between now and the end of 2024, with market experts predicting two cuts before the year is out. 

Meanwhile, commentators are warning Australians not to get their hopes up for cuts in 2024, following the latest messaging from the RBA that inflation remains above target and is proving to be persistent.  

Recent data has shown that the path for inflation to turn to the target range of 2-3 per cent has been “slow and bumpy”. 

CFS continues to believe that over in the US, inflation will continue to be rocky and that gross domestic product (GDP) data over the rest of the year is likely to be a little bit weaker. 

However, this does not mean that a US recession is expected. 

Periods of share market volatility emphasise the importance of diversification in investment portfolios, as it helps manage the inevitable volatility that you experience from time to time in markets. 

If you’re wondering about whether you should make changes to your investments, we recommend connecting with your financial adviser to review your investment goals, identify any potential opportunities, and make changes if necessary.  

 If you don’t have an adviser, you can find an adviser near you using our Find an Adviser service at cfs.findadviser.com.au. Call us with any general queries on 13 13 36, Monday to Friday, 8:30am to 6pm Sydney time (+61 2 9197 3050 from outside of Australia).