Market Update – Quarter Ending September 30, 2025
Market Update
| October 15, 2025
Market Update
The September quarter presented investors with a complex investment landscape characterised by persistent policy uncertainty. Global equity markets have demonstrated remarkable durability despite ongoing trade tensions and fiscal brinkmanship in Washington, with international (hedged) shares advancing around 17% and Australian shares gaining about 11% over the past twelve months.
Three Key Themes:
The quarter was dominated by three key themes: trade policy uncertainty surrounding the scheduled expiration of the US-China trade war truce in November, congressional negotiations on the One Big Beautiful Bill Act, and the Federal Reserve’s calibrated approach to monetary easing. Despite these headwinds, risk assets remained supported by continued AI infrastructure investment, fiscal stimulus expectations, and ongoing rate cut anticipation.
Accommodation over overheat
Central banks maintained their dovish pivot, with the Fed pricing in two additional rate cuts by year-end despite inflation remaining sticky around 3% – well above the 2% target but below concerning levels. Bond markets interpreted the tariff rhetoric as more deflationary than inflationary, driving Treasury yields lower across the curve. The 10-year Treasury yield declined as rate cut expectations intensified, reflecting market positioning for economic accommodation rather than overheating concerns.
A Bias to Cyclical Sectors
Market dynamics favoured cyclical sectors over defensive positioning, with Information Technology significantly outperforming sectors like Consumer Staples. Equity valuations remained elevated, with US share markets maintaining levels consistent with major bull market peaks – a dynamic we’re monitoring closely within our “Own Things at Sensible Prices” philosophy.
Gold Rush
Perhaps most notable was gold’s extraordinary surge of around 50% over the past year, signalling growing market recognition of fiscal and monetary trajectory concerns. With foreign central banks accelerating gold purchases at the fastest pace in eight years and expectations building for Fed balance sheet expansion, the precious metal reflected legitimate concerns about long-term currency debasement that extend beyond typical inflation hedging.
What Should You Do Now?
With markets balancing policy uncertainty, high equity valuations, and shifting interest-rate expectations, now is a good time to review your investment positioning:
Equity Investors:
- Check that your exposures remain sensibly valued, especially in growth and tech sectors after strong performance.
Income-Focused Investors:
- Reassess fixed-income allocations as falling bond yields and expected rate cuts may affect income and defensive positioning.
Diversified Investors:
- Ensure your portfolio remains balanced across sectors and asset classes, given ongoing trade and fiscal uncertainty.
Real Asset Considerers:
- Gold’s surge highlights its potential role as a hedge; review whether a modest allocation fits your strategy.
Need Advice?
Our team can help you navigate these changes and optimise your retirement strategy. Contact us today for a personalised consultation.
Phone: (08) 9316 3050
