Weekly recap
What happened in markets
The Australian sharemarket finished lower over the course of the week, down 0.7%, as markets succumbed to rising global bond yields and stretched valuations after strong GDP data. Losses in Information Technology (-3.7%) and Financials (-0.9%) sectors were driven by bond-market pressure and concerns over RBA rate-cut prospects, while gold soared to record highs as investors sought safe havens. The market rebounded later in the week, led by strong gains in the Big Four banks, and the Materials sector (+0.5%), which was buoyed by positive news from global markets and supportive momentum in iron ore. Elsewhere, the Energy sector conceded 1.2%, while the Health Care sector dropped 0.9%.
US sharemarkets ended mostly higher in the holiday-shortened week, as the S&P 500 touched a fresh record and closed 0.4% higher. The major technology companies outperformed on favourable news for Alphabet (+10.1%) and Apple (+3.2%). Gold surged nearly 4% to a record high, while oil slipped on OPEC+ output headlines. As a result, the Energy sector dragged on the indices and lost 3.5%. Trade policy remained in focus, with Trump appealing a court ruling that limits presidential tariff powers. The US Federal Reserve independence concerns lingered as Governor Cook faced a Justice Department probe, while speculation intensified around Powell’s successor. Among the other sectors, Consumer Staples added 0.4%, while Utilities shed 1.0%.
European sharemarkets fell for a second straight week, weighed down by French political uncertainty and cautious sentiment around valuations. Analysts noted that while the STOXX 600 outlook has been revised higher, concerns remain over the pace of German reforms. Inflation data showed headline CPI holding near the ECB’s 2% target, reinforcing expectations that policy may remain unchanged in the near term. The Bank of England flagged uncertainty in the policy outlook, balancing inflation risks against evidence of labour market weakness.
Stock & sector movements
What caught our eye
Earnings Season Wrap: The Good, The Drag and the “Glad We Sold It”
Australia’s latest 2Q 2025 earnings season just wrapped up with a mixed scorecard, roughly an even split between companies that beat and missed expectations. While that marks a step down from the stronger beat ratios seen in recent years, there were still encouraging signs. That being said, investors showed little patience for disappointment, as misses were punished more heavily than usual, while positive surprises were rewarded handsomely.
Overall, earnings growth for FY25 remains subdued, but signs of life in consumer activity and improving corporate sentiment suggest the economic backdrop may be turning a corner.
At a portfolio level, we were pleased to see holdings in the Cutcher & Neale Australian Shares Model deliver positive results, with many of our core holdings not only weathering the earnings test but outperforming expectations.
The Good: A String of Standouts
Several of our holdings reported positively, most notably:
- Seek (SEK) rewarded patient holders, with earnings resilience amid a tight jobs market and digital platform strength.
- Harvey Norman (HVN) impressed, with its cost discipline and sales strength reflecting stabilising consumer demand, an early beneficiary of easing financial conditions.
- NextDC (NXT) and Life360 (360) each reported results that beat expectations, benefiting from ongoing tech infrastructure demand and consumer digital habits.
- Brambles (BXB) delivered strong free cash flow and reaffirmed its asset efficiency story. A US$400m buyback was the icing on the cake.
- Generation Development Group (GDG) showed revenue more than doubling thanks to the Lonsec merger, a new acquisition and steady growth in investment bonds and managed accounts. Earnings came in ahead of expectations and management sounded upbeat about future opportunities, especially in adviser platforms and product innovation.
- Qantas (QAN) posted a solid result amid a travel rebound, navigating cost pressures with improving load factors and loyalty performance.
From Defensive Giant to Portfolio Drag
On the other side of the ledger, one of our holdings, CSL (CSL), stumbled. The biotech giant’s earnings quality was underwhelming, with margin pressure at CSL Behring and soft immunoglobulin sales. Guidance disappointed, and critically, management abandoned their margin recovery timeline.
Glad we Sold It
One of the best moves this reporting season wasn’t a stock we held, it was one we recently sold. James Hardie (JHX) reported one of the worst results across the ASX, with a massive earnings miss which led to a ~43% cut to FY26 EPS forecasts. Our timely decision to exit JHX proved fortuitous. Sometimes, not owning something is just as important as owning the right things.
Looking Ahead: Selective Optimism
Overall, this earnings season gave credence to our investment approach and portfolio positioning. Results were mixed at the index level, but many of our holdings shone through the noise.
We remain selective but optimistic. Our exposure remains skewed towards businesses with quality fundamentals and structural tailwinds.
The week ahead
A quiet week ahead locally, as the NAB Business Conditions and Confidence will be released, along with the Westpac Consumer Confidence.
Overseas, investors will gain access to China's Consumer Price Index, along with their imports and exports. In the US, the Consumer Price Index will also be released, as well as Initial Jobless Claims.
A comprehensive investment strategy and strong asset allocation can assist with maximising the benefits and minimising the risk across your portfolio as part of achieving your individual goals and objectives. Supported by our dedicated investment team, we focus on communicating market developments and investment opportunities to our clients in a timely manner. We take the time to fully understand both your current financial position and goals. Then we tailor a comprehensive investment strategy to match and implement it on your behalf.
