Market Insights

Australian equity markets finished the year on a stronger note, with the traditional “Santa rally” delivering a +1.3% gain for the S&P/ASX 200 in December, taking full-year returns to approximately +10%. While headline performance was constructive, market dynamics beneath the surface remained fragmented, continuing the theme rotations that characterised much of 2025.

Macroeconomic data releases were lighter through the month, but commentary from the RBA reinforced a more cautious policy stance. The Bank left the cash rate unchanged at 3.60%, citing a still-tight labour market and stronger-than-expected business investment. Importantly, the RBA pushed back against expectations of near-term rate cuts, leaving investors with a more asymmetric outlook in which policy easing appears distant, and the risk of higher-for-longer settings remains possible.

Sector performance told a clear story. Materials was the standout in December and for the year as a whole, benefiting from tailwinds across commodities. Gold prices surged above US$4,300/oz, copper rose sharply, and lithium prices continued their recovery from mid-year lows. These moves drove strong relative performance across gold producers, base metals, and select bulk commodity exposures.

In contrast, Technology and Healthcare were among the weakest sectors, reflecting a continued de-rating of higher-multiple growth stocks amid a less supportive interest-rate backdrop and a stronger Australian dollar. The Quality factor, which dominated returns in earlier phases of the cycle, remained under pressure as momentum and value continued to lead.

Encouragingly, small and mid-cap equities showed greater resilience, supported by, in our opinion, more attractive starting valuations, stock-specific catalysts, and ongoing corporate activity. The dispersion between winners and losers remained wide, reinforcing the importance of active management and bottom-up research.

Moving to global markets, December was more balanced. U.S. equity markets advanced modestly, supported by cooling inflation data and expectations for further Federal Reserve rate cuts following the December easing. In contrast to Australia, the U.S. policy trajectory appears more clearly biased toward gradual easing, which has supported equity multiples and earnings sentiment.

Europe remained steady but subdued, while Japan continued to stand out as a relative outperformer, driven by earnings momentum and ongoing governance reform. China’s market was mixed, with targeted stimulus measures providing some support, but property-sector weakness continuing to weigh on confidence.

…To read the full version, or listen to a summary, please click the links below:

Market Insights

Australian equity markets declined in November, with the S&P/ASX 200 falling 2.7%, underperforming most developed markets. Domestic sentiment was weighed down by a stronger-than-expected inflation print, which prompted a reassessment of the interest-rate outlook.

The introduction of the new monthly CPI series saw headline inflation print at 3.8% y/y, reinforcing concerns that inflation (particularly in services) remains more persistent than anticipated. With unemployment holding around 4.3%, markets are paring back expectations for further rate cuts, with policy now expected to remain restrictive for longer. There is even discussion emerging of rate hikes in 2026.

Performance was marked by sharp sector divergence. Healthcare (+2%) and Materials (+1.7%) were the best-performing sectors, supported by positive AGM updates and continued strength in gold-exposed stocks. In contrast, Information Technology (-11.6%), Financials (-6.5%), and REITs (-3.8%) lagged, as higher rate expectations and valuation sensitivity weighed heavily on duration-exposed assets.

Beneath the index, leadership continued to rotate. Small and mid-cap stocks again showed relative resilience, with the ASX Mid-Cap 50 the only major index to finish the month higher, while the ASX20 was the weakest performer. We believe this reflected both more attractive valuation starting points and increased investor focus on company-specific fundamentals amid macro uncertainty.

M&A activity remained a notable feature despite weaker markets. November saw continued interest across infrastructure and logistics assets, including bids for Qube and National Storage REIT, highlighting the growing disconnect between public market valuations and private capital’s assessment of long-term asset value.

Globally, November was characterised more by cooling momentum than outright risk aversion. Importantly, Fed communication has been less about committing to rapid cuts and more about watching the data, particularly around inflation and the labour market.

Europe remained subdued but stable. Inflation is continuing to moderate (including lower services inflation), and the ECB’s tone has been consistent with a wait-and-see stance.

Japan has continued to stand out as a relative bright spot, supported by earnings momentum and governance reforms. Meanwhile. China remains mixed with targeted policy support helping at the margin, but property-related weakness is still a meaningful headwind to confidence and activity.

…To read the full version, or listen to a summary, please click the links below:

“In investing, what everyone knows is usually not worth knowing.” – Howard Marks

Market Insights

Australian equities ground higher through October, with the ASX 200 Accumulation Index rising modestly as company results, interest rate expectations, and commodity moves all impacted sentiment. Market leadership continued to broaden away from the large-cap financials and into cyclicals, gold, copper, and selective mid-cap industrials.

The domestic economic picture remains mixed, but in our opinion generally positive. Unemployment has stabilised at 4.2-4.3%, job vacancies continue to drift lower, and forward indicators of household spending remain soft. Inflation pressures are still present in services, but goods disinflation and weaker demand are helping overall CPI track down towards the RBA’s target band.

The market continues to price a single RBA rate cut by mid-2026, though global easing cycles (particularly in the U.S. and Europe) are expected to tighten relative yield differentials into the new year.

Reporting is still seeing dispersion. Travel and Leisure names delivered strong results, while consumer goods, healthcare services, and building materials were more mixed. Small and mid-caps outperformed again, supported by strong gold and copper moves, and ongoing M&A interest across technology, energy, and telecom infrastructure.

Commodity markets played an important role in equity returns.

Gold remained well bid near record levels, supported by central bank buying and lower global real yields. Copper continued its rally as supply-side constraints and Chinese restocking drove spot demand. In contrast, energy exposed sectors lagged, as oil fell sharply on rising global inventories and waning geopolitical risk premium.

Global equities rose again in October, with the MSCI ACWI (AUD) posting a positive return as major central banks indicated confidence that inflation is sustainably easing.

The U.S. Federal Reserve cut rates 25bps in October and is now holding policy steady. However, it did reiterate that additional cuts in early 2026 are likely (albeit slowing and potentially coming to an end), with softer labour market prints signalling that excess heat has finally left the jobs market. The ECB remained on hold, highlighting improved inflation momentum across Europe. Japan continued to perform strongly as earnings remained robust and governance reforms drove capital returns.

China remained mixed: manufacturing PMI are neutral to soft, but property sector data remained weak. Policymakers announced targeted stimulus measures late in the month, including liquidity injections and credit support for housing completions, providing some stability for commodities and related equities globally.

…To read the full version, or listen to a summary, please click the links below: