“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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