Your Market Update - January 2026

Your Market Update - Summary

Market Key Points 

• Global markets ended the year on a steady but mixed note, supported by the US Federal Reserve’s December rate cut. Defensive assets, gold, and commodities helped offset softer technology valuations.
• Australian shares finished higher despite volatility driven by shifting rate expectations and mixed economic data. Materials and financials led gains, lifting the broader index while most other sectors declined.
• International share markets performed broadly well, with Europe leading gains. The US edged higher on easing expectations, while Asia delivered mixed results, with Japan outperforming and China lagging.
• Fixed interest markets were uneven as global and Australian bond yields rose. Credit markets softened, although global high‑yield debt held up better due to demand for higher income and stable fundamentals.

Market Developments

Global & Australian Markets

Global markets closed out 2025 on a generally steady footing despite mid‑month volatility. The US Federal Reserve’s December rate cut helped stabilise sentiment, although gains remained measured as investors stayed selective. Strength across defensive sectors, gold, and commodities helped counterbalance valuation pressures in parts of the technology industry.

Australian shares ended the year higher following a choppy December influenced by shifting expectations around interest rates. A hotter‑than‑expected inflation reading pushed anticipated rate cuts further out, causing uneven sector performance. Materials benefitted from firming commodity prices, and financials added support, while all other major sectors finished the month in decline.  

International share markets delivered broadly positive results in December. Europe led global gains, while the US saw modest advances amid easing expectations and continued valuation caution.

Asia was mixed: Japan outperformed on strong corporate momentum, whereas China continued to lag. Larger global companies slightly outpaced small caps as investors favoured balance‑sheet strength and stability. 

Fixed Interest and Credit Markets

Fixed interest markets were mixed heading into year‑end. Global bonds edged lower as expectations around the timing of US policy easing shifted. Australian bonds also weakened as yields rose. Higher yields placed pressure on credit markets; however, global high‑yield bonds proved more resilient, supported by the ongoing search for income and relatively stable credit fundamentals.