The Australian share market closed out its financial year by returning 1.9% in June and a healthy 14.8% for the year, largely on the back of a strong resource sector which improved by 23%. The US market continued its impressive performance this year by returning 6.6% in June driven by strong demand for technology stocks associated with the boom in artificial intelligence. Other markets were mixed with Europe up 2%, the UK declining 1% while China was basically flat.
Bond markets were weaker as expectations for further increases in cash rates became mainstream thinking as inflation is proving more stubborn than policy makers anticipated last year. Australian 10-year bonds increased by 42bp to close at 4.03% following yet another 25bp rate hike by the RBA in June, while the US equivalent 10-year treasury bond yield increased by 18bp to close at 3.81%. Both the Australian and US yield curves are now inverted, meaning shorter dated yields exceed longer yields, a reliable indicator of a forthcoming recession. Commodity markets were stronger with oil 3.9% higher and iron ore up 7.2% which pushed the $A higher to close at 66.6 US cents.