“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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