Market Wrap July 2025
June: Equity Markets Rally Continue
Australian large cap equities posted modest gains over June, with the S&P/ASX 200 Index returning +1.41%, marking a third consecutive month of positive performance. Market sentiment was supported by stabilising economic data and continued optimism around potential interest rate cuts. Australian smaller companies underperformed large caps, with the S&P/ASX Small Ordinaries Index returning +0.85% for the month, as investor preference tilted toward more defensive large- cap exposures.
International equities extended their rally in June, as inflation indicators in major economies showed further signs of easing. The MSCI World ex Australia Index rose +2.45%, supported by strength in US and European markets. Emerging market equities delivered stellar returns with the MSCI Emerging Markets Index gaining +4.10% outperforming large cap equities, performance was driven by the Chinese equity market which makes up majority of the index. The MSCI World ex Australia Small Cap Index returned +2.85%, continuing its solid performance amid improving risk appetite.
Listed real assets posted gain albeit small compared to equities in June. Global listed property rebounded on expectations of a more accommodative rate environment, with the FTSE EPRA/NAREIT Developed Hedged Index returning +0.41%. Infrastructure assets were more muted, as the FTSE Developed Core Infrastructure 50/50 Index returned +0.23%, reflecting the sector’s typically defensive characteristics.
Bond markets were positive for the month of June, aided by softer inflation data and signals from central banks indicating a shift towards more dovish policy. The Bloomberg AusBond Composite 0+ Year Index returned +0.75%, while global bonds rebounded with the Bloomberg Global Aggregate Index (AUD Hedged) returning +0.91% for the month.
Due to global market uncertainty there has been reduced demand for the safe-haven USD with risk-sensitive currencies the AUD has rebounded now up 6.35% over the USD over the last six months.
Job Market:
U.S.
- The annual unemployment rate declined slightly to 4.1% in June 2025. Employment continued to trend up in health care, while jobs in Federal Government have continued to decline.
- U.S. Non-farm payrolls rose by +147,000 in June. The Labor force participation ticked down slightly to 62.3% and marks the lowest level since December 2022.
Locally
- The Consumer Price Index (CPI) in Australia rose 2.1% in the 12 months to May 2025. The top contributors to the annual change were Alcohol and Tobacco (+5.9%), Food and non-alcoholic beverages (+2.9%) and Housing (+2.0%).
- Australia's seasonally adjusted unemployment rate remained at 4.1 percent in May 2025. Australia employment decreased by approximately 2,000 to 2,500 people in May 2025. Australia’s seasonally adjusted labor force participation rate remained steady at 67.0% in May.
Major Asset Class Performance
| Asset Classes | 1 Month % | 1 Year % | 5 years (p.a.) % |
|---|---|---|---|
| Australian Shares | 1.4 | 13.8 | 11.9 |
| Australian Small Companies | 0.9 | 12.3 | 7.4 |
| Global Shares (Unhedged) | 2.5 | 18.6 | 15.8 |
| Global Shares (Hedged) | 3.8 | 13.5 | 13.6 |
| Global Small Companies (Unhedged) | 2.9 | 16.7 | 12.1 |
| Global Emerging Markets (Unhedged) | 4.1 | 17.5 | 7.9 |
| Global Listed Property (Hedged) | 0.4 | 8.4 | 4.5 |
| Listed Infrastructure (Hedged) | 0.2 | 14.7 | 7.0 |
| Australian Fixed Income | 0.8 | 6.8 | -0.1 |
| International Fixed Income | 0.9 | 5.5 | -0.6 |
| Cash | 0.3 | 4.4 | 2.3 |
Source: Lonsec iRate, Rhombus Advisory, 30 June 2025
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets
(unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property
(hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Listed Infrastructure (hedged); FTSE Global Core Infrastructure 50/50 NR Index (AUD Hedged)
Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate
Total Return Index Value Hedged AUD
Please note: Past performance is not indicative of future performance.
Currency Markets
| Asset Classes | 1 Month % | 1 Year % | 3 years (p.a.) % |
|---|---|---|---|
| AUD / USD | 0.66 | -1.3 | -1.6 |
| AUD / GBP | 0.48 | -9.1 | -5.5 |
| AUD / EURO | 0.56 | -10.3 | -5.4 |
| AUD / YEN | 94.56 | -11.7 | 0.4 |
Source: Lonsec iRate, Rhombus Advisory, 30 June 2025 All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance.
