The month that was...

The one sector that had protected returns from global equity markets in an eventful 2022 was technology, with the likes of Facebook, Microsoft, Amazon and Apple, continuing to power ahead, or at least hold their ground in the face of significant risk.

While many of the world’s largest companies delivered better than expected quarterly reports, the technology sector suffered some real pain. Shares in Meta Platforms dropped by as much as one third, among the largest capital destructions in history, as the company announced they expected further losses from their struggling metaverse investments.

The pain wasn’t quite as bad for Amazon, but signs of a recession and a slowdown in spending sent the company down double figures as well.

The ‘will he or won’t he’ game continued with Elon Musk finally taking control of social media platform Twitter. He immediately took the company private, firing most key executives and will seek to rebuild the group from scratch without the pressure of being on a listed market.

Headlines remain focused on the impact on free speech or the challenge of monitoring content on the platform, but it is clear Musk will seek to monetize the business something the prior management team have been unable to achieve.

Another month passes and the United Kingdom welcome another Prime Minister in what is becoming a revolving door of leadership. The man who triggered the departure of Boris Johnson before losing out on the members vote has now taken the top job, being Rishi Sunak.

The change highlights the incredible power that investment markets and community sentiment can have over important political decisions with Liz Truss’ disastrous fiscal policy announcement trigger significant volatility in every part of the UK economy and market. Many challenges lie ahead with significant inflation, high budget deficits and slowing growth.

Sticking with politics, or geopolitics for that matter, Xi Jinping has seemingly consolidated his position as the longest standing leader of the Communist Party extending his term by a further five years. Many are now predicting this will become a lifetime position with far reaching impacts for the economy. That said, China and Asia more broadly look set to drive economic growth for decades to come as a focus on building self-sufficiency and global influence triggers massive stimulus.

Coming out of extended lockdowns, with an already slowing property market and plenty of room for fiscal and monetary stimulus, the region is well placed for a period of outperformance.

Every year the prognostications of October being the worst month for markets are raised once again but are constantly proven to be a game of chance more than anything else. It was with some surprise then, that global sharemarkets managed to deliver among their best returns for more than 50 years.

Spurred on by hopes that interest rate hikes were set to slow, continued strength in the energy sector and a stronger than expected reporting season, the Dow Jones gained more than 14 per cent for the month. The S&P500 gained around 8 per cent with the Australian market underperforming, adding just 6 per cent.

Australian markets were broadly positive as strength expanding from outside the energy and materials sectors. The decision by the Reserve Bank to increase rates by just 25 basis points in October and November suggests they are acutely aware of the real risk to the economy.

The slowdown in rate hikes contributing to outperformance from the property sector (+9.9 per cent) and financials (12.2 per cent) with the latter benefitting from expanding net interest margin amid hopes of higher profitability.

The Labor Government delivered its own mini budget in October, with a focus on pulling back on ‘excess’ spending but little in the way of significant change. Concern continues to grow about the size and potential waste within the NDIS, yet the government retained the stage three tax cuts as agreed.

Off-market buy backs by ASX-listed companies have all but ended, while the downsizer contribution criteria has been loosened in hope of stimulating more action in the property market.