Economic Update - November 2025

Global equity markets continued their positive momentum in October, with major indices posting gains despite ongoing geopolitical and economic uncertainties. The S&P/ASX 200 rose by 0.4%, while global equities, as measured by the MSCI World Index (AUD), climbed 3.3%. Emerging markets outperformed developed markets, with the MSCI Emerging Markets Index (AUD) up 5.5%.

Sector Performance: Winners and Losers

Australian Equities

• Materials (+4.3%): Led the gains, buoyed by rising prices in gold, iron ore, and copper. Positive commodity trends and capital rotation into resource stocks were key drivers.

• Energy (+3.7%): Supported by strong commodity prices.

• Information Technology (-8.4%): Declined sharply, reflecting global tech volatility.

• Consumer Discretionary (-6.8%) and Health Care (-4.8%): Also saw notable declines, impacted by sector-specific headwinds.

Best Performers (Month):

• Clarity Pharmaceuticals Ltd (+37.6%) – Positive trial results.

• Domino’s Pizza Enterprises Ltd (+35.9%) – Takeover speculation.

Worst Performers (Month):

• WiseTech Global Ltd (-23.4%) – Regulatory investigation.

• Bapcor Ltd (-20.2%) – Weak trading update.

Global Equities

• US Equities: S&P 500 up 2.3%, driven by easing trade tensions and robust corporate earnings.

• Europe: UK’s FTSE 100 up 3.9%; Germany’s DAX up 0.3%.

• Japan: Nikkei 225 surged 16.7%, reflecting optimism over new leadership and expansionary policies.

• Emerging Markets: Outperformed, with China stabilising and India poised for growth due to expected tax cuts and accommodative monetary policy.

Property & Infrastructure

• Australian REITs: S&P/ASX 200 A-REIT Index up 0.6%.

• Global Real Estate: Fell by 0.8%, with office sector challenges offset by growth in data management and supply chain infrastructure.

• Global Infrastructure: Mildly overweight positioning due to attractive valuations and defensive qualities, especially as interest rates trend lower.

Fixed Income

• Australian Bonds: Yields flat, offering good value and safety from overseas volatility.

• Global Bonds: Mixed performance, with UK Gilts rallying and Japanese bonds under pressure from policy changes.

• US Treasuries: Yields fell as the Federal Reserve cut rates, but future cuts remain uncertain. 

Key Influences: Positives and Negatives

Positive Drivers

• Commodity Strength: Rising prices in gold, copper, and iron ore supported resource sectors.

• Corporate Earnings: Solid results in the US and select global markets.

• Emerging Market Recovery: Stabilising profit forecasts and attractive valuations, especially in China, South Korea, and India.

• AI and Technology: Enthusiasm for AI is boosting valuations, with genuine productivity gains beginning to emerge.

Negative Drivers

• Inflation Surprises: Hot CPI readings in Australia and the US have tempered expectations for rate cuts.

• Geopolitical Uncertainty: US government shutdown risks and trade negotiations continue to cast a shadow.

• Labour Market Softness: AI-driven automation is displacing early-career workers, creating generational divides in employment.

• Sector-Specific Headwinds: Regulatory investigations and poor trading updates weighed on select companies.

Looking Forward: What’s Next for Financial Markets?

Focus Areas

• Interest Rate Policy: Central banks remain cautious, with future rate cuts dependent on inflation and employment data.

• AI Transformation: Markets are watching for real productivity gains versus speculative enthusiasm.

• Emerging Markets: Continued recovery in China and India could drive broader rallies.

• Infrastructure Investment: Data centres, utilities, and transportation networks are set to benefit from ongoing investment and policy support.

Key Factors Impacting Markets

• Inflation and Monetary Policy: Surprises in inflation readings and central bank decisions will remain pivotal.

• Geopolitical Events: US government shutdowns, trade negotiations, and leadership changes in major economies.

• Technological Disruption: AI’s impact on productivity and employment is reshaping market dynamics.

• Valuation and Earnings Growth: Investors are weighing low growth and high valuations in Australia against more attractive global opportunities.

Conclusion

October’s market performance reflected a delicate balance between optimism in select sectors and caution amid economic and geopolitical uncertainties. Investors should remain alert to shifting trends in inflation, interest rates, and technology, while considering the opportunities emerging in global infrastructure and emerging markets. As always, diversification and a keen eye on sector dynamics will be key to navigating the months ahead.

As always, if you have any questions or require a review of your investments, please don't hesitate to contact us.

Thanks to our research partners at Lonsec for assisting with the preparation of this Economic Update.