Investment Markets In Review – 30 November 2025

Pitcher Partners Investment Services (Melbourne) | The information in this article is current as at December 11, 2025.

The 2025 calendar year is drawing to a close with investors in generally good standing. Another year of strong returns looks likely, with investors having navigated an array of opportunities and challenges through the year, namely US policy uncertainty and surging investment and related wealth effects from the Artificial Intelligence thematic.  

Donald Trump began his second term as U.S. President on January 20 and quickly moved to implement his tariff-focused campaign promises. Key sectors affected included metals, pharmaceuticals, semiconductors, and vehicles. While China remained the main target, uncertainty spread as even close U.S. trading partners were drawn in. The first few months saw a flurry of tariff announcements, delays, rollbacks, and changes, culminating in the “Liberation Day” announcement in April, which sparked significant market turmoil. 

According to the Federal Reserve Bank of Richmond, the implied Average Effective Tariff Rate swung dramatically during this period—from 2.5% to nearly 27%—before settling at 8.7% by mid-May. Actual tariff rates differed from these estimates due to importer adjustments, such as changing suppliers and product mixes, and delays in implementing announced tariffs. 

The Liberation Day announcement triggered a sharp equity sell-off and spilled over into bond markets. An initial rush into bonds reversed quickly, with yields spiking amid inflation fears, margin calls, and investors dumping U.S. government bonds once considered safe. The U.S. government later scaled back some proposed tariffs, and markets gradually recovered through late April and May, returning to a relatively stable upward trend. 

For Australian investors, every major asset class delivered positive absolute returns to the end of November 2025. Emerging market equities provided the strongest returns followed by currency hedged global equities. Unhedged returns were offset by a +5.8% appreciation in the Australian dollar. The ASX 200 returned +8.9%, a relatively modest performance compared to outsized returns generated in 2024. Materials, particularly the resources sector, led the way along with strong performances from large cap technology stocks. Poor performance by CSL over the year dragged the healthcare sector into the negative. 

Global equities gained ground over the year to 30 November despite considerable turbulence in March – April and a minor softening in November. In both cases the triggers emerged from the US macro events firstly from the Liberation Day tariffs and then the secondly the US federal government shutdown. The MSCI World index continued its run of above average results returning +18.8% in local currencies. The S&P 500 returned +17.8% on a total return basis to the end of November as all sectors advanced. A persistent concern throughout the year was the high valuation and optimistic profit expectations in the AI industry, however, the tech and communications sectors recorded the strongest growth at +34.9% and 24.4% respectively. Utilities continued their cyclical transformation from a defensive sector to a growth sector returning 22.3% pulled along by the explosive growth in data centres and the corresponding rise in electricity demand. 

Defence stocks also broadly outperformed globally as technological and geopolitical drivers continued a trend that emerged in 2024 as ETF providers began adding defence focused ETFs to their offerings. Perhaps in homage to the family of American ballistic missiles of the same name, VanEck coined the ‘Titan 5’ group of defence stocks which had all doubled in value during the year. With the current geopolitical tensions and European defence spending policies expected remain into the medium-term defence stocks are well positioned for 2026, especially those from neutral Asian and NATO ex-US countries. Tech has proved to be another key growth driver in defence as is has in other sectors of the market with strong gains accruing to companies specialising in intelligence, data and robotics such as drones. 

At the beginning of the year most economists were predicting four rate cuts by the RBA for 2025. By November the bank had cut rates three times with an unexpected jump in inflation recorded late in the year giving economists cause to reevaluate their forecasts. Markets are now pricing in at least one rate hike in 2026 although much of the inflation increase reflects temporary factors including volatile fuel costs and the expiry of electricity rebates. Services inflation remains stubborn however, while housing affordability pressures have intensified through the second half of this year.  

In the US, inflation remained above the Federal Reserve’s target for much of 2025 as elevated energy prices persisted amid stronger than anticipated consumer demand. The bank maintained the Fed Funds Rate above 4.25% for most of the year resisting public pressure from the US President before three cuts lowered the target band to 3.50% – 3.75%. In the Eurozone. the ECB’s rate cutting cycle came to an end mid-year as inflation moved back within the ECBs target range. Rates are expected to remain stable at 2.0% through the end of 2025. 

The private credit market continued to expand and evolve through the year, as cautious lending practices by banks and attractive rates drew in investors and incentivised further product offerings. Concerns of a market bubble became more prominent after the collapse of Tricolor Holdings and First Brands Group in September but demand remains strong in this large and fast growing sector.   

Gold was on everyone’s lips as geopolitical uncertainty and falling interest rates pushed the metal through the US$3,000 mark in March followed by the US$4,000 mark in October. By the end of November Gold was up +60% since January. Precious metals with industrial uses including silver and platinum appreciated even further, driven by their use in electronics, solar panels and clean technologies. Energy prices stabilised after the supply disruptions of previous years, and oil had fallen below US$60 a barrel by the end of November.  

In currency markets, the Australian dollar briefly fell below US$0.60 following the tariffs announcement in early April before climbing back above USD $0.66 in early December. 

Thank you 

A quick reminder that our offices will be closed from 12pm, Friday 19th December.  We will have a skeleton crew on call for any urgent requests over the holiday season, with our office re-opening on the 7th January 2026. 

We appreciate the faith you have placed in us this year to help you achieve your financial objectives and would like to express our sincere gratitude for your continuing support. Wish we you, your family and friends a safe and enjoyable festive season and look forward to working for you all in 2026. 

Source: Morningstar, IRESS