End of financial year market wrap 2024-25

The 2024/25 financial year has passed, and what a year it was. I am taking this opportunity to reflect on the last 12 months, what key economic developments influenced Australian markets, and, importantly, what they mean for investors.

The year has been one of disruption caused by geopolitical conflicts, policy shifts, and uncertainty on tariffs; however, despite this, Australian financial markets have shown resilience, and disciplined long-term investors have been rewarded.

The S&P 500 performed well, gaining over 10% primarily due to the technology and communication sectors. Nvidia, Apple, and Coinbase had strong earnings, and the improvement in investor sentiment played a pivotal role in the results. There was and will continue to be a direct market focus on innovation and digital infrastructure, particularly in AI, semiconductor, and blockchain.

The tariff issue brought on by the Trump administration did impact markets earlier this year; however, investors tuned into the strength of corporate success and anticipated an easing of monetary policy, which helped the markets recover well. The US strike on Iranian nuclear facilities in June sent a shockwave through energy markets, which resulted in a spike in oil prices. The aftermath was a softer landing than first anticipated, bringing certainty to the global security forecast. This allowed markets to rebound quickly.

There was a noticeable uptick in merger and acquisition activity globally, hitting USD 1.89 trillion in the first half of the financial year alone. Much of the activity centered around Asia, particularly in Japan and China.

The Australian share market, ASX, was solid, posting a steady 7% return. This was due to interest rate cuts, consistent GDP growth, and the resources and banking sectors performing well.

Gold was the standout and overtook coal for the first time as one of our top export earners. Uncertainty always surges demand for gold, and exports of the precious commodity are expected to exceed AUD $56 billion over the next financial year.

Other opportunities are present in renewable energy, infrastructure, and critical minerals, thanks partly to the federal government’s “Future Made in Australia” investment fund. This initiative is fostering investor confidence in Australia’s economic outlook.

While economic forecasts are optimistic, we remain cautious in the first half of the 2025/26 financial year. Interest rates, geopolitical instability, and fiscal and trade policy are three primary considerations.

For our clients, your portfolio has been carefully assembled to safeguard against uncertainty while focusing on high-quality companies with healthy balance sheets and competitive advantages. We maintain that long-term investing is essential to successful wealth accumulation and remains the keystone to our investment philosophy.
As always, feel free to contact me directly with any questions.

Article prepared by Cayle Petritsch, Director and Wealth Advisor @ North Advisory