PRFA Reports
Market performance was broadly positive in January. Gold and other precious metals were the standout performers, supported by strong ETF flows throughout the month, notwithstanding a sharp reversal on the last trading day of January. Emerging markets performed strongly, also benefitting from increased capital allocations as well as a weakening US dollar and a price appreciation from locally based semiconductor manufacturers. US equity markets rotated toward energy, materials, and industrials, as the artificial intelligence (AI) thematic awaits further validation of an uplift in earnings.
In Australia, the resource sector was the dominant contributor. Elevated gold prices, supported by geopolitical uncertainty and demand for inflation hedges, underpinned strong performance from gold producers and diversified miners.
Investor Insights December Qtr 2025
The fourth quarter of 2025 delivered strong returns for investors, driven by a rally in global equities. Notably, market participation broadened beyond technology, with gains across sectors and regions, including global banks, small caps, and emerging markets. Bond markets remained range-bound due to lingering inflation concerns.
Heading into the first quarter of 2026, with markets at or near all-time highs, our outlook remains positive as strong earnings forecasts are coupled with monetary and fiscal policy tailwinds. While supported by several positive factors, we retain a vigilant stance on specific risks such as resurgent inflation and geopolitical tensions that may impact portfolio positioning.
The Australian economy has been slowly recovering, but sticky inflation and an evolving interest rate environment pose potential risks to current economic momentum.
Australian residential property prices continue to rise as market imbalances support prices but add to economic and social risks, raising regulator concerns.
Business sentiment
Corporate sector confidence has continued to improve, helped by improving economic growth and interest rate cuts. However, caution prevails among businesses as forward orders soften and the interest rate environment swings more hawkish.
Market performance was mixed November, with heightened volatility creating a clear divide between defensive and growth assets. Interesting to note that most major equity indices ended close to flat as sentiment oscillated between strong earnings results and growing caution around Artificial Intelligence (AI) driven optimism.
Infrastructure was the standout performer, supported by resilient income streams and sustained demand for utilities.
While the US outperformed peers, the ASX here in Australia underperformed global peers over the month - driven by a mix of stock-specific pressures and a more challenging domestic inflation and interest rate backdrop.
With inflation still sitting well above the RBA's target range, data reinforces expectations that the interest-rate cutting cycle has ended unless the labour market deteriorates significantly. Consequently, the RBA held rates steady at its November meeting - the decision was unanimous and no consideration was given to a rate cut - and the Board highlighted that inflation has picked up and the broader economy is showing signs of improving momentum.
As we post this the RBA has just announced at the November meeting (on Melbourne Cup Day) that it will be keeping interest rates on hold at 3.6 per cent - citing higher-than-expected inflation.
The decision was unanimous and in line with widely held expectations.
Equity markets strengthened in October, recording solid gains with little weakness across regions. Emerging markets continued to deliver solid performance, led by Asian regions as trade discussions advanced. Gold continued to rally, topping $US4300 per ounce before experiencing a pullback. Bond markets experienced minor moves as the US Federal Reserve cut interest rates by 25 basis points as expected.
Economic update September 2025
Equity market returns were mixed in September, with global equity markets delivering reasonably strong gains, while Australian equities experienced a modest decline (retreating from August's record high). Emerging Market equities were the best performers, led by Asian regions. Bond markets experienced relatively minor moves, and within Commodities, Gold rose sharply. In the US, the Federal Reserve (the Fed) cut interest rates by 25 basis points, while in Australia, the RBA kept interest rates on hold at 3.60% and indicated that any rate cuts are now likely delayed. Labour markets in Australia remain stable but mildly tight.
The RBA reduced the cash rate by 025% to 3.6%, as the Board became confident that inflation has sustainably moderated. Commentary from the RBA indicated that they were comfortable with the level of inflation and that their policy priority is maintaining full employment in the economy. Over in the US, equity markets and bond yields fell sharply at the start of August with investors starting to think that a rate cut in September is likely. Their September employment report will be closely monitored.
Commodity performance was mixed, with iron ore and gold advancing while oil retreated.
Policy uncertainty across key economies, continues to cloud the global outlook, but investor sentiment has managed to improve - but geopolitical tensions, evolving central bank stances and uneven global growth remain key sources of potential market disruption. In this environment, a patient, flexible investment approach anchored in fundamentals remains essential.
Investor Insights - June 2025 quarter
Global markets brush off uncertainty, but economic risks remain.
Australian economic growth remains anaemic, but it's believed that a more favourable policy backdrop characterised by subdued inflation, fiscal support and rate cuts should help support economic activity.
The 2025 financial year unfolded in two distinct phases. The first six months were marked by strong equity market performance, supported by solid corporate earnings, stable economic growth, and
declining inflation trending towards central bank targets. Then, as the calendar year began, geopolitical uncertainty took hold, with US trade policy becoming a key concern for markets.
Fears over the impact of tariffs on inflation and growth prompted an investor shift away from US equities, increased interest in European markets, and greater volatility in bond yields. Investor demand for gold also rose as risk aversion returned to the forefront.
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As we post this update, the RBA has just announced its decision to keep rates on hold, in what is being called a surprise decision. The RBA Governor said, however, that further relief was likely, with the outcome of the June quarter inflation report (released at the end of July) being the key factor. AMP Chief Economist, Shane Oliver, expects the RBA to cut in August & November this year, and then February 2026. Westpac IQ concurs with this view.
Investor Insights - March 2025 quarter - some in-depth analysis
PRFA Trump Tariff - April 2025
Economic Update December 2024 - year in review
Economic Update September 2024
Economic Update - 2024FY in review
Economic Snapshot - 2023 in review
Economic update - October 2023
Economic update - September 2023
Economic Update - February 2023
Economic Update - January 2023
Economic Update - November 2022
Economic Update - October 2022
Economic Update - September 2022
Economic update - February 2022
Economic update - FY summary - June 2021
Market watch - Top 3 themes - Feb 2021
