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25 Sep 2023 - Glenmore Asset Management - Market Commentary

By: Glenmore Asset Management

Market Commentary - August

Glenmore Asset Management

September 2023

Globally equity markets in August were broadly weaker. In the US, the S&P 500 fell -1.8%, whilst the Nasdaq declined -2.2%. In the UK, the FTSE 100 fell -3.4%. Impacting investor sentiment was weaker than expected Chinese economic data (eg. Industrial output and credit growth), which saw commodity prices fall during the month.

In Australia, the All Ordinaries Accumulation index fell -0.7%. Consumer discretionary was the top performing sector (driven by better than feared results), whilst utilities and staples (ie. more defensive sectors) underperformed. August saw the majority of listed companies report their results for the six months to 30 June, which provided an excellent health check on how these companies are trading in the current economic environment.

In terms of the macro environment, data in August pointed to a continued reduction in inflationary pressures both in Australia and overseas. This in turn, should mean the bulk of heavy lifting in terms of interest rate rises needed to bring inflation down to targeted levels, has now been done.

We viewed the August reporting season on the ASX as broadly better than had been feared. Many companies are seeing significant cost pressures (eg. wages, energy, rent, interest expense), however these issues were well known going into reporting season. Interestingly, the consumer discretionary sector performed well despite bearish expectations by investors. Whilst economic conditions remain challenging, it is important to remember the stock market is forward looking, hence we continue to believe the correct approach is invest in quality businesses and take a medium-term view, particularly given inflation data is now pointing to a clear decline from the very high levels of 6-12 months ago.

Funds operated by this manager:

Glenmore Australian Equities Fund

Australian Fund Monitors Pty Ltd
A.C.N. 122 226 724
AFSL 324476
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