Your Market Update - Summary
Global markets continue to navigate geopolitical tensions, particularly in the Middle East, which have contributed to ongoing volatility. However, overall sentiment remains supported by economic data, earnings resilience and expectations that disruptions may ease.
The US economy remains a standout, with strong corporate earnings and continued momentum from AI-led investment across technology and communications sectors. Consumer resilience and a healthy labour market continue to support growth, although inflation remains above target.
Australia’s economic picture is more mixed. Inflation remains elevated, and recent interest rate increases are beginning to slow domestic demand and place pressure on households. Resource companies have benefited from higher commodity prices, while consumer-facing sectors have been weaker.
Markets are currently expecting limited further monetary policy tightening, with only one additional interest rate increase anticipated.
Changes introduced in the 2026 Federal Budget, including adjustments to negative gearing and capital gains tax, are expected to moderate housing demand and credit growth. While these reforms may impact specific sectors, their long-term influence on broader equity markets is expected to be limited.
Market performance was broadly positive over the month, with international equities continuing to lead returns.
Global shares delivered strong gains, particularly in hedged portfolios which rose 5.4% over the month and nearly 30% over the past year, while unhedged international shares also posted solid results.
Australian equities were more subdued in comparison, rising modestly over the month and remaining weaker over the short term, although longer-term returns remain positive. Smaller companies outperformed their larger counterparts both locally and globally, supported by broader market participation. Fixed interest assets delivered modest positive returns as bond yields eased, with Australian bonds outperforming global peers, while cash continued to provide stable but lower returns.
