August 2021 Newsletter
It’s August, and this chilly winter and periodic lockdowns can’t end fast enough for many of us. One bright spot, along with the golden wattle at this time of year, is the golden performance of our athletes in Tokyo.
The economic fallout from on-again, off-again lockdowns continued in July. The annual rate of inflation rose from 1.1% to 3.8% in the June quarter. This temporary blip was due to higher prices for childcare (which was free in the June quarter last year), petrol and goods in short supply due to supply chain and workforce disruptions. Even so, the Reserve Bank has said it won’t consider lifting interest rates until inflation is “sustainably” within its 2-3% target range.
The Australian economy is expected to contract and unemployment to rise in the September quarter, after the jobless rate fell from 5.1% to a 10-year low of 4.9% in June. Not surprisingly, consumer confidence as measured by ANZ and Roy Morgan fell to an 8-month low of 100.7 points in July. Retail trade fell 1.8% in June but remained 2.9% up on a year earlier.
There are positive signs though for Australian miners’ profits and dividends. Crude oil and natural gas prices are up around 50% this year, while iron ore prices are up 24% due to the gradual reopening of global economies and China’s strong growth, up by an annual rate of 7.9% in the June quarter. Record exports pushed Australia’s trade surplus to a record high of $13.3 billion in June. Australia’s housing boom is also increasing demand for materials, with housing construction hitting a two-and-a-half year high in the March quarter.
The Australian dollar fell one cent to around US74c in July.
On the King & Whittle front, we have some bittersweet news to share with you all. Our bubbly front-of-house receptionist and all-round superstar, Trinity Zender, will be moving into a new position as Show Room Coordinator in her dream industry of interior design at a firm called StyleCraft. Trinity’s last day will be Friday the 13th August, so feel free to pass on your best wishes to Trinity in her exciting new venture before she departs.
Until next month,
Your King & Whittle Team
New COVID-19 relief schemes explained
As we navigate ongoing lockdowns due to COVID-19 across Australia, here is a guide to the latest benefits you may be entitled to from the Federal and State Governments.
Australia-wide initiatives
The Pandemic Leave Disaster Payment (PLDP) is a program to support you, if you find yourself in a situation where you are unable to earn an income because you are required to self-isolate, quarantine, or are caring for someone with COVID-19. The payment provides a lump sum of $1,500 per fortnight and you will need to meet certain criteria, which does vary between states and territories.
A COVID-19 Disaster Payment (CDP) is available for workers who are adversely affected by a state public health order including a lockdown, hotspot or movement restrictions. Again, the eligibility criteria vary by state, as can the amounts.
Investing lessons from the pandemic
When the coronavirus pandemic hit financial markets in March 2020, almost 40 per cent was wiped off the value of shares in less than a month.i Understandably, many investors hit the panic button and switched to cash or withdrew savings from superannuation.
With the benefit of hindsight, some people may be regretting acting in haste.
As it happened, shares rebounded faster than anyone dared predict. Australian shares rose 28 per cent in the year to June 2021 while global shares rose 37 per cent. Balanced growth super funds returned 18 per cent for the year, their best performance in 24 years.ii
While every financial crisis is different, some investment rules are timeless. So, what are the lessons of the last 18 months?