Hear from our Chief Executive Officer and Partner Jarred Rubin as he discusses Market Insights for July.
Insight 1: Australian Markets
July was a tale of two markets. The ASX 200 returned 2.3% for the month, but underneath, the ASX 20 was up 3.7% while the Small Ordinaries fell 3.2%. That’s a spread of almost seven percentage points in a single month, one of the widest we’ve seen, and it reflected a decisive rotation into liquidity and defensiveness ahead of reporting season.
Energy led the sectors, up more than 12%, as Brent crude rebounded roughly 24% to around US$90 a barrel, and local refiners Ampol and Viva Energy pointed to strong earnings on the back of elevated refining margins. Financials also rose almost 6%, with the banks rallying strongly on defensive flows.
At the other end, lithium was hit particularly hard, with Liontown Resources down 35% and Pilbara Minerals down 17%, as prices continued to reverse. Iron ore also fell, weighed down by concerns around China’s property downturn and rising supply from the Simandou project in Guinea ramping up. Technology fell close to 5%, though Wisetech managed a 10% bounce.
Insight 2: Global Markets
The global backdrop was defined by an AI-related sell-off. South Korea fell almost 24% for the month, a striking number that reflects how much semiconductor exposure there is in the KOSPI, and the S&P 500 finished roughly flat, down 0.1%.
Investors began questioning the pace and economics of AI infrastructure spending, prompted by three developments in quick succession: Meta’s decision to offer excess computing capacity externally, the release of the Kimi K3 model out of China, and widening credit spreads on US hyperscaler bonds. Together they raised questions about the returns on the hundreds of billions of dollars being invested in data centres and chips.
Because Australia has limited AI exposure and offered regional stability, our market outperformed most developed peers, with large pools of capital rotating out of emerging Asia and into the ASX.
Insight 3: Outlook
The June quarter trimmed mean inflation printed at 0.8%, comfortably below the RBA’s own forecast, and the market immediately abandoned pricing for an August rate hike. The RBA subsequently held at 4.35% in August, though Governor Bullock’s follow-up remarks were widely characterised as a hawkish pause.
Globally, the S&P 500 has since rallied sharply to fresh record highs above 7,700 as US earnings and cooler inflation reassured markets on the AI story. Focus now turns to August reporting season in Australia, where we believe the market is likely to reward margin durability over headline revenue growth.
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