The Australian Growth Fund fell -3.7% in April, lagging the benchmark index which fell -2.7%. Stickier than expected inflation data internationally was replicated in Australia. The Australian Q1 inflation print of +3.6% was higher than expected and resulted in the market pushing out its expectation of when the Reserve Bank of Australia will first cut interest rates. This underpinned a sharp increase in the Australian Govt 10yr bond yield which rose from 4.0% to 4.4% over the month. This in turn contributed to equity market softness, with the interest rate sensitive Real Estate (-7.8%) and consumer discretionary (-5.1%) sectors dragging the ASX200 index lower.

Resmed (+9.0%) rose sharply after delivering a strong result in Q3 of its financial year, with sales growing +7% versus the same quarter last year, ahead of market expectations. This growth was broad based by geography and by division (both flow generator and masks sales were strong). Good cost control saw gross margin rise by 2.4% and helped translate into the company’s after tax profit rising 27% compared to Q3 of its 2023 financial year. This went some way to allay the market’s fears about the impact that the new generation of weight loss drugs could have on Resmed’s earnings prospects.

Johns Lyng’s share price fell -12.3% although there was no company specific news in the month. This was likely a result of lower catastrophe events in Australia in the year to date, and a realisation by the market that aggressive revenue growth in the US may be a couple of years out. Offsetting the first point, Johns Lyng have a long pipeline of catastrophe repair work from the events that happened in 2021/22 that will support catastrophe revenues for at least the next 12-18 months. And to the second point, Johns Lyng management have been explicit on their US strategy and that they are building the foundations for a successful long-term business by investing ahead of the growth.