Market Insights

Australian equity markets began 2026 with continued divergence beneath the surface. The S&P/ASX 200 rose +1.78% in January, supported primarily by a powerful rally in Materials, while growth-oriented sectors and the Quality factor remained under pressure.

The defining feature of the month was commodity strength. Gold rose approximately +13% in USD terms, extending what has now been one of the strongest multi-year advances in decades. Central bank gold purchases, which according to the World Gold Council reached record levels in 2024 and remained elevated through 2025, continue to provide structural support. Copper also firmed, metallurgical coal rallied, uranium strengthened, and spodumene prices surged sharply.

In contrast, Technology stocks declined heavily as global markets grappled with the accelerating pace of AI development. Several new large language model releases in December and January heightened concerns about disruption risk for incumbent software businesses. The result was a rapid compression in valuation multiples globally, particularly across high-duration growth equities.

We highlight caution when assessing any new technology investment given the current pace of distribution and supersession.

From a macro perspective, Australian inflation data for the December quarter surprised modestly to the upside, with headline CPI at 3.8% year-on-year and trimmed mean inflation remaining, in our opinion, sticky. Producer price inflation also remained firm. As a result, expectations for the RBA cash rate target have been repriced materially, and the RBA subsequently raised the cash rate by 25bps in early February to 3.85%.

The divergence between Australia and the United States remains noteworthy. While the Federal Reserve is broadly expected to continue its easing cycle, Australia’s policy stance is more neutral to mildly restrictive. This interest rate differential, combined with strong commodity prices, saw the Australian dollar rally approximately +4.4% in January to around US$0.70.

Globally, equity markets were constructive. Emerging markets outperformed (+8.8%), Japan remained firm, and the S&P 500 advanced modestly. However, beneath headline returns, sector rotation has intensified. The dispersion between winners and losers, both across sectors and within them, continues to widen.

In our view, this environment reinforces the importance of disciplined active management. Markets are increasingly differentiating between balance sheet strength and leverage, genuine cash-flow durability and narrative growth, structural advantage and commoditised exposure.

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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.

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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.

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“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.

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“Discipline is doing what needs to be done, even when you don’t feel like doing it.” – Unknown

Market Insights

Australian Market

The S&P/ASX200 Accumulation Index rose 3.1% in August, marking another strong month for Australian eqAustralian equities were mixed in September, as investors balanced optimism over U.S. rate cuts with domestic inflation pressures and cautious RBA commentary.

The ASX 200 Total Return Index fell -0.8%, with energy (-9.8%) the weakest sector, impacted by the collapse of the proposed Santos takeover. Materials (+9.2%) led the market, supported by a broad rally in gold miners as the metal neared US$4,000/oz.

The domestic economy continues to show resilience.

Australia’s August CPI rose 3.0% YoY, the highest reading in a year, as electricity rebates rolled off and household service costs increased. Markets now price only one RBA rate cut by March 2026, down from two at the start of September. Unemployment held steady at ~4.2%, with solid full-time job growth but a decline in vacancies, suggesting the labour market is starting to cool.

Performance across market segments diverged sharply. Small and mid-cap equities again outperformed: the ASX Small Ordinaries Accumulation Index gained +3.4%, and the ASX300 ex-20 rose +0.85%, while large caps were flat to down. In our opinion, this rotation reflects growing investor interest in companies with earnings leverage to falling global rates, particularly gold, copper, and early-cycle industrials.

Defensives such as Consumer Staples and Healthcare lagged, while higher-growth sectors like Technology, Biotech, and Defence posted strong gains. Meanwhile, the “defence spending thematic” gained further momentum, pushing stocks such as DroneShield, Electro Optic Systems, and Codan spiking higher.

Global Markets

Global equities extended their upward trend in September, with the MSCI ACWI (AUD) gaining 2.33%, with local market gains partly offset by AUD strength. Emerging markets led the rally, driven by China’s partial recovery and semiconductor strength across Asia.

In the U.S., the S&P 500 advanced around +3.6%, propelled by resilient earnings and shifting Fed expectations which cut interest rates by 25 bps to 4.00%-4.25%, its first reduction of 2025. Core inflation was roughly stable, and the labour market is showing signs of loosening.

European markets posted modest gains amid a backdrop of easing inflation and soft growth. The ECB held policy steady, emphasizing a wait-and-see stance given historically aggressive cuts earlier in the year.

Asia delivered standout returns: Japan extended gains, with the Nikkei hitting multi-decade highs, supported by corporate profit strength and a benign BoJ posture. China’s equity rebound was powered by renewed stimulus expectations, whilst trade tensions continue to be watched.

Commodities diverged: gold continues to surge (up another ~+10%), driven by real yield compression and liquidity optimism. Oil was volatile and weakened over the month. Copper rebounded up month-over-month, reflecting hopes of renewed industrial demand.

Geopolitically, markets watched the U.S. budget impasse (leading to a government shutdown) with caution and the court victory shielding Fed Governor Lisa Cook from removal, boosting perceptions of some stability. Meanwhile, the U.S. and EU have progressed a framework to resolve tariff friction, and the U.S. and Japan revised auto import agreements, reducing trade overhangs.

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“Discipline is the bridge between goals and accomplishment.” – Jim Rohn

Market Insights

Australian Market

The S&P/ASX200 Accumulation Index rose 3.1% in August, marking another strong month for Australian equities. Markets were buoyed by a third RBA cash rate cut this year, bringing the rate to 3.60%, and supported by global signals from Jackson Hole that U.S. policy easing is likely in September.

The August reporting season provided a wealth of insight into corporate resilience.

Consumer optimism surprised to the upside: retailers exposed to household goods reported accelerating sales growth of 4-8% in early August, particularly in hardware, electrical, and furniture. This momentum reflected the compounding effect of two RBA cuts (in February and May), robust wages growth, and ongoing house price appreciation. Despite higher household debt, in our opinion these factors underpinned spending, showing the Australian consumer is resilient.

Banking sector results reinforced this resilience. CBA reported lower impairment charges, while NAB flagged stabilisation in arrears, suggesting stress levels are moderating. Regulatory reforms post-GFC and a more supportive approach to arrears management have also softened the impact of higher borrowing costs.

Sector performance was diverse:

• Materials (+9.0%) and Energy (+1.6%) rallied as Chinese policy support lifted commodity demand. Importantly, China announced large-scale infrastructure initiatives and began tackling industrial overcapacity in steel, aluminium, and solar, improving outlooks for exporters.
• Healthcare (-13.3%) was hit hard led by CSL (-21.4%) after delaying gross margin recovery expectations. Globally, healthcare budgets and reimbursement rates are failing to keep pace with inflation and rising operating costs.
• Consumer Discretionary outperformed as rate-sensitive names rallied on stronger spending signals.

Reporting season was notable for its volatility: average share price moves on result day reached ±8.3%, on our assessment, the most volatile season on record. We believe that algorithmic and systematic trading amplified these swings, leading to dislocations between earnings revisions and share price reactions. For long-term investors, such volatility provides opportunities to differentiate between short-term distortions and genuine shifts in company value.

Global Markets

Global equities advanced again in August, but leadership narrowed, and dispersion increased across regions and styles. The MSCI ACWI (AUD, Net Return) rose +0.8%, extending a four-month winning streak.

Materials (+5.3%) led on firmer commodity prices and improving industrial demand signals, while Healthcare (+3.1%) and Communication Services (+2.5%) also contributed; Consumer Staples (-1.1%) and Real Estate (-0.8%) lagged as risk appetite remained firm.

US equities closed at fresh highs, yet the rally’s breadth was less even than earlier in the year, with growth- and cyclical-exposed segments continuing to carry most of the load.

• United States. The S&P 500 and Nasdaq posted a fifth straight monthly gain, supported by an earnings season in which over 75% of companies beat expectations. Core inflation cooled modestly, while headline was nudged up by firmer energy; the Fed stayed in wait-and-see mode ahead of September.
• Europe. Major indices (Euro Stoxx 50, DAX) ground higher despite softer hard data. Manufacturing stayed weak, but services stabilised and inflation continued to moderate, allowing the ECB to reinforce a cautious easing path (further cuts contingent on sustained disinflation). Earnings were broadly supportive overall; industrials and luxury outperformed, while banks came under pressure as investors reassessed profitability in a lower-rate environment.
• Asia. Performance was mixed. China struggled to maintain July’s momentum as weaker property data and ongoing geopolitical tension weighed on consumer and financials, even as policy support and tech earnings offered some offsets. Japan extended gains on robust corporate profits, a weaker yen, and steady export demand; the BoJ kept to a gradual normalisation, a stance equity markets interpreted as supportive for risk assets.

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“In the midst of chaos, there is also opportunity.”- Sun Tzu

Market Insights

Australian Market

The S&P/ASX 200 Total Return Index rose 2.4% in July, closing above 9,000 points for the first time. This capped a strong run for Australian equities, with small and mid-caps also performing well. The ASX Small Ordinaries Accumulation Index gained 2.8%, marking its fourth consecutive monthly advance and +11.7% since March.

Sector performance was led by Healthcare (+9.5%), Energy (+6.0%), and Materials (+4.1%), all areas that had lagged over the past 12 months. Healthcare rallied on strong updates from CSL and ResMed, Energy was boosted by higher oil and LNG prices, and Materials benefitted from a rebound in gold and lithium miners. Financials (-1.0%) were the notable laggard, driven by a pullback in Commonwealth Bank after a long rally.

Macro conditions were supportive:

• Headline CPI fell to 2.2%, firmly inside the RBA’s target range.
• The labour market softened slightly, with unemployment edging higher, seen as bolstering the case for further RBA easing.
• The AUD remained near 20-year lows, enhancing export competitiveness and attracting offshore inflows.

China’s announcement of large-scale infrastructure spending, coupled with early signs of supply-side reform to tackle industrial overcapacity, helped lift sentiment across key commodities like iron ore, coal, and base metals.

Global Markets

The MSCI AC World Index (AUD) rose 3.2% in July, as growth-oriented sectors: Technology (+6.5%), Communication Services (+4.1%), and Energy (+4.3%) led the way, while defensives like Consumer Staples (-0.4%) and Healthcare (-0.3%) lagged.

United States:

• The S&P 500 and Nasdaq posted new record highs. Mega-cap tech earnings exceeded expectations, particularly in AI infrastructure, semiconductors, and cloud services.
• Retail sales were weaker, while inflation was mixed: headline CPI held steady, core eased marginally.
• The Fed held rates but noted that a cut as early as September was possible if labour market data continued to soften.

Europe:

• The ECB cut rates for a second consecutive month, signalling a measured easing path. Earnings beats in industrials, financials, and luxury supported sentiment, but growth data remained subdued.

Asia:

Commodity markets were mixed: gold prices consolidated near record highs on central bank demand and geopolitical hedging, while oil prices eased late in the month as OPEC+ output discipline came into question.

Japan extended gains on yen weakness and corporate governance reforms.

China posted strong tech sector earnings and reiterated stimulus commitments, but property sector data disappointed, capping broader equity gains.

Global Markets

The MSCI AC World Index (AUD) rose 3.2% in July, as growth-oriented sectors: Technology (+6.5%), Communication Services (+4.1%), and Energy (+4.3%) led the way, while defensives like Consumer Staples (-0.4%) and Healthcare (-0.3%) lagged.

United States:

• The S&P 500 and Nasdaq posted new record highs. Mega-cap tech earnings exceeded expectations, particularly in AI infrastructure, semiconductors, and cloud services.
• Retail sales were weaker, while inflation was mixed: headline CPI held steady, core eased marginally.
• The Fed held rates but noted that a cut as early as September was possible if labour market data continued to soften.

Europe:

• The ECB cut rates for a second consecutive month, signalling a measured easing path. Earnings beats in industrials, financials, and luxury supported sentiment, but growth data remained subdued.

Asia:

Commodity markets were mixed: gold prices consolidated near record highs on central bank demand and geopolitical hedging, while oil prices eased late in the month as OPEC+ output discipline came into question.

Japan extended gains on yen weakness and corporate governance reforms.

China posted strong tech sector earnings and reiterated stimulus commitments, but property sector data disappointed, capping broader equity gains.

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“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” – Charles Darwin

Market Insights

Australian Market

In June, the S&P/ASX 200 Accumulation Index rose 1.4%, extending its strong performance in 2025. In our opinion, this was largely fuelled by falling risk premia across defensive sectors and optimism around potential rate cuts.  The strong performance was despite continued broader macro volatility driven by trade and geopolitical tensions.

Over the last 12 months (FY25) Investor gains were concentrated in specific sectors: Financials led with +14.5%, followed by Communications (+11%), Consumer Discretionary (+18%), and Technology (+21%). In contrast, Materials (-7%), Energy (-14%), and Healthcare (-1.3%) underperformed, reflecting softer commodity prices, cost volatility, and investor rotation out of defensives into more rate-sensitive equities.

Australia’s rally has been heavily impacted by the narrow moves of large-cap stocks. Remarkably, Commonwealth Bank (CBA), much discussed and debated, alone contributed to 30% of index returns over the past year, highlighting the market’s concentration and raising challenges for active managers navigating these concentrated valuation dynamics.

A critical backdrop to these trends is the U.S. “tariff reset” under President Trump. In early June, steel and aluminium tariffs were doubled to 50%, triggering supply chain adjustments and imported inflation signals across global markets. Australia’s currency weakened as a result, supporting domestic exporters and lifting sectors such as real estate and small caps, which benefit from introspection and perceived local stability.

Energy stocks rallied amid rising oil prices driven by on-going Middle East tensions. Conversely, gold miners lagged despite robust metal prices, in our opinion largely due to firm-level cost pressures curbing margin expansion. Meanwhile, most other Materials firms saw earnings downgrades tied to weaker global demand trends and trade exposure.

Global Markets

On a global scale, the MSCI AC World Index (AUD) advanced 2.6% in June, primarily due to a narrow rebound led by large-cap Tech and Communication Services stocks.

Equities in the U.S. reached all-time highs despite renewed tension in the Middle East and spikes in U.S. tariffs. Notably, coordinated U.S.-Israeli strikes against Iranian facilities prompted temporary yield spikes, but strong early-June inflation data supported ongoing disinflation themes.

However, June’s U.S employment beat reduced the odds of a July Fed rate cut.  We highlight that about 50 bps of easing is still priced in for late 2025.

In Europe, the ECB delivered its first 25 bps rate cut, a milestone showing growing policy divergence between U.S. refrain and European easing. Core inflation eased and services sector stability offset weakness in industrial cyclical sectors.

Asia showed a mixed picture. While China’s equity market endured early weakness tied to a troubled property sector and fading confidence in stimulus, Japan held ground as a defensive alternative for investors amid currency shifts.

Key sector themes included a sharp rotation into Technology and Growth, while traditional defensives: Utilities, Consumer Staples, and Healthcare underperformed in the uptick. Across asset classes, gold held firm at elevated levels, supported by macro-instability and central bank buying tendencies.

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“In times of turbulence and change, it is more true than ever that knowledge is power.” – John F. Kennedy

Australian Market

The Australian equity market delivered a strong result in May, with the S&P/ASX 200 Accumulation Index rising 4.2%, marking a reversal from the volatility seen earlier in the year.

In our opinion, this was not solely a relief rally, it was underpinned by tangible macro and micro-economic developments that helped reignite risk appetite.

The Reserve Bank of Australia (RBA) delivered its second 25bps cut for the year, lowering the cash rate to 3.85% and acknowledging that a 50bps move was discussed. This marked a shift toward policy acceleration, with the RBA responding to signs of demand weakness (notably a surprise fall in April retail sales) despite persistent strength in employment figures.

Investor sentiment was further supported by a clear outcome in the federal election, with the Labor government returning with a majority. This removed policy uncertainty and allowed investors to begin pricing in the fiscal impact of its campaign commitments, most notably the Housing Australia Future Fund and broader infrastructure plans.

Equity markets responded strongly, especially in the more interest rate-sensitive corners of the market:

Tech stocks surged nearly 20%, led by companies like Wisetech, which benefited from M&A activity and upgrades to global logistics demand.

REITs and discretionary retailers also gained, as lower bond yields and consumer optimism (buoyed by anticipated mortgage relief) lifted valuation multiples.

Gold remained a standout theme. Prices breached US$3,000/oz amid ongoing global volatility and rising central bank purchases. Australian gold miners like De Grey, and Pantoro outperformed, buoyed by the rising commodity price and local M&A activity.

However, not all sectors participated in the equity rally. Energy lagged, with oil prices falling below US$60/bbl after OPEC+ raised output guidance. Some Materials names were also hit by concerns over slowing Chinese industrial demand and global supply chain congestion.

Importantly, smaller companies outperformed large caps. The ASX Small Ords rose 5.76%, and the ASX 300 ex-20 gained 5.58%, compared to a 3.2% gain in the ASX 50 benchmark. This reflects a broader rotation into domestic cyclicals and quality growth businesses outside the ASX50.

Global Markets

Global equity markets saw a return of risk-on momentum in May, with the MSCI AC World Index (AUD) advancing 5.1%, despite policy and geopolitical uncertainty remaining high (in our opinion, when compared to Australia).

A key macro driver was the ongoing volatility around U.S. trade policy. The Trump administration’s “Liberation Day” tariffs, which introduced sweeping levies of up to 145% on Chinese imports and 10–30% on other key partners were challenged in court and briefly blocked.

However, they were reinstated on appeal, only to be paused mid-month amid diplomatic negotiations. These developments caused substantial intraday volatility and forced investors to adjust pricing for inflation expectations, global logistics costs, and multinational earnings exposure.

U.S. equities managed to rally through the month, led by large-cap Technology and Communication Services stocks. Microsoft was emblematic of this, posting a robust beat on Azure and AI-related cloud infrastructure growth. Meanwhile, Consumer Discretionary and Financials showed mixed results, as companies began flagging margin compression due to input cost volatility and tariff-related disruptions.

In Europe, markets held steady, helped by signals from the European Central Bank that a rate cut could be delivered as soon as June. This supported Financials and Industrials, although autos and luxury goods underperformed due to euro strength and declining Asian demand.

China surprised on the upside, with policymakers announcing a new round of targeted stimulus, particularly for the property and tech sectors. Equity markets initially rose on the news but gave up some gains late in the month as economic data remained patchy.

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“The greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic.” – Peter Drucker

Australian Market

April witnessed a remarkable rebound in Australian equities, with the S&P/ASX 200 Accumulation Index rising 3.6%. This performance was particularly notable given the significant intra-month volatility, where the index initially dropped 6.5% before rallying nearly 10% from its monthly low. This sharp turnaround was driven by investor optimism following reports of a temporary pause in the U.S. tariff escalation, which had initially spooked global markets.

Several factors contributed to Australia’s resilience.

• Domestic Economic Strength: Australia’s economy continues its robustness, underpinned by reasonably strong consumer spending and (now) a stable political environment. The recent re-election of the centre-left government with an expanded majority has provided policy continuity, further bolstering investor confidence.
• Attractive Valuations: Compared to global peers, we believe Australian equities are trading at relatively attractive valuations. The S&P/ASX 200’s projected Price Earnings (PE) ratio stands at 16.4 times, with an indicated dividend yield of 3.8%, making it appealing for investors seeking capital appreciation or yield.
• Currency Advantage: The Australian dollar remains near the bottom of its 20-year range, enhancing the competitiveness of Australian exports and making local assets more attractive to foreign investors.

Sector-wise, performance was mixed:

• Technology, Media & Telecom (TMT): These sectors led the months’ rally, supported by falling bond yields and a pivot back to structural growth stories.
• Gold Miners: Continued their ascent as spot prices surged past US$3,000/oz, reflecting ongoing investor demand for safe-haven assets.
• Energy and Materials: Lagged due to a 18% fall in oil prices, following increased OPEC supply quotas and concerns over global demand.

Notably, international investors have been increasing their exposure to Australian equities. Macquarie revealed that offshore investors purchased A$800 million in bank stocks in Q1 2025, with buying momentum continuing into April. This trend underscores Australia’s appeal as a relatively insulated market amid global trade tensions.

Global Markets

Global equities faced headwinds in April, with the MSCI AC World Index (AUD) declining by 1.7%. The primary catalyst was the U.S. administration’s “Liberation Day” tariffs announced on April 2, which imposed tariffs of up to 145% on Chinese imports and 10–30% on other major trading partners. This abrupt policy shift triggered significant market volatility.

Key developments included:

• U.S. Market Volatility: The S&P 500 experienced a sharp 12% drop in early April, followed by a 9.5% rebound after the administration paused reciprocal tariffs. Despite the recovery, the index remains down year-to-date, reflecting investor caution.
• European Stability: European markets showed relative resilience, with the STOXX 600 declining modestly. Export-focused sectors like autos and luxury goods faced pressure due to the strong euro and reduced U.S. demand.
• China’s Modest Rebound: China’s equity market posted a 1.3% gain mid-month, buoyed by policy support and investor optimism. However, gains were later tempered by renewed concerns over export demand.
• Gold’s Surge: Gold prices continued their upward trajectory, driven by geopolitical risks and investor risk aversion. Gold stocks remained standout performers across regions.

The global investment landscape is increasingly characterised by:

• Trade Policy Uncertainty: The unpredictability of U.S. trade policy has introduced significant uncertainty, prompting investors to reassess risk exposures.
• Central Bank Dilemmas: Central banks are grappling with the dual challenges of rising inflation from tariffs and slowing growth from trade disruptions, complicating monetary policy decisions.
• Shift to Quality: In this environment, we believe that investors are, and will continue, to gravitate towards companies with resilient earnings, strong balance sheets, and pricing power.

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