The Australian Share Market delivered a return of (+3.2%) for August. That marks the 5th straight month of positive returns with the share market now up more than (+25.0%) since the low point in April.
The big difference for August was the strong returns from the smaller companies listed on the market. The top 50 companies rose (+1.6%) on average while the smaller companies index was up (+8.2%). Smaller companies tend to have a more local focus and benefit from falling interest rates while larger companies contend with global issues such as tariffs.
The best performing sectors for the month were Resources (+9.6%), Consumer Discretionary (+7.4%) and Utilities (+4.9%). After lagging the broader share market for a few years, the resources sector is now outperforming the index for the year so far. Healthcare was the big negative down (-13.3%).
The world share index climbed (+0.9%) for August. The US market was up (+1.9%), China (+8.0%), Japan (+4.0%). Things weren’t as positive in Europe with the UK up (+0.6%), but both France (-0.9%) and Germany (-0.7%) posted negative returns.
OpenAI (the maker of ChatGPT), has become the world’s most valuable private company with an estimated value of US$500 billion. Current annual revenue is about US$12billion, which has more than doubled from last year. According to OpenAI, 73%of the searches are not work related, 52% of the users are female and most people use ChatGPT for writing, practical guidance or seeking information.
House prices rose (+0.7%) in August which is the strongest month since May 2024. Brisbane (+1.2%), Perth (+1.1%) and Sydney (+0.8%) led the way. Melbourne was up (+0.3%) for the month, but has delivered the lowest growth of the capital cities over the past 12 months. Research firm Cotality indicates 61% of all houses have 2 people or less living in them while 76% of all houses have at least 3 bedrooms. There might be a housing shortage, but it appears there is no shortage of big houses.
The RBA cut interest rates to 3.6% which was the third rate cut this year, but there might not be many more to come. The odds of another rate cut later this month are priced at 14%, with most estimates predicting just one more cut to come in November.
Inflation rose to 2.8%, while unemployment fell to 4.2%. The Australian dollar climbed (+1.8%) against the US dollar.
The price of Iron Ore was up (+2.8%), Gold jumped (+4.8%), while the price of Oil (-6.5%) and Bitcoin (-8.7%), both fell. Gold is now up 40% for the year to date and has been having its best year since 1979.
