Pitcher Partners Investment Services (Melbourne) | The information in this article is current as at October 6 2025.
Financial markets provided a constructive third quarter of 2025, with the positive sentiment around equities unwavering, the Fed resuming its cutting cycle, and AI remaining the topic du jour. The three major US equity markets were close to, or posted, new record highs by the end of the quarter, with Chinese tech companies also riding the AI thematic.
Growing momentum was observed in equity markets throughout Q3, as trade uncertainty diminished and corporate earnings proved to be resilient to headwinds. The S&P 500 (+7.8%) and the NASDAQ 100 (+9.0%) finished only 0.2% and 0.4% short of their all-time highs respectively, with the run led by growth stocks. In further good news, anticipated rate cuts in the US are likely to provide an additional tailwind for US equities. Asian equities also rode the AI wave, with Chinese equities finishing 12.7% higher for the quarter and Japanese equities up 11%. The Eurozone also advanced during the quarter, with the French CAC (+3.0%) and UK FTSE (+6.7%) up, however German equities proved to be a laggard (-0.1%). This mixed performance was through a combination of geopolitical tensions and reduced US trade uncertainty, causing the magnitude of Eurozone returns to lag their hot start to the year. Australian equities experienced their most volatile earnings period on record, however the ASX 200 was positive over the quarter, returning 3.58%.
Bond markets provided positive returns over the quarter as many central banks either continued or resumed their rate cutting cycles. The US Fed lowered the Fed Funds rate to 4.00-4.25% at its September meeting, citing a softening labour market as the catalyst. Concern around potential increases in inflation from tariffs remains, however markets are now pricing a further 100bps of cuts in the US over the next 12 months. The RBA also lowered the cash rate to 3.60% in July, although the trajectory of future cuts became uncertain as the quarter ended with a combination of higher than expected inflation and a resilient labour market. The stability of fiscal deficits remains a concern globally, with long-term yields remaining elevated, seeing yield curves steepen yet again (US 10yr 4.15%). Weakness in the US Dollar saw Emerging Market bonds continue their bumper year, up 4.4% over the quarter. Credit continued to perform in Q3 with spread tightening in both investment grade and high yield instruments, with spreads in many markets globally approaching all-time lows.
Gold continued to be in vogue as investors sought a haven asset in the face of stretched equity valuations, fiscal stability concerns, geopolitical tensions, and overall economic uncertainty. Gold finished the quarter up 16.8% at a price of US$3,859/oz. Crude oil posted a negative quarter, down 4.20%, with the US and OPEC+ members opting to increase production.
US cryptocurrency regulation led to heightened sentiment in the market, with Bitcoin posting a 6.4% increase over the quarter and reaching a record high near US$123,000 in August. The Australian dollar appreciated by 0.50% against the US dollar, closing the quarter at $0.6613.
| Financial Markets at 30 September 2025 | |||
| Indices | Current Level | 3 Months | 1 Year |
| ASX 200 | 8,848.8 | 3.6% | 7.00% |
| ASX 200 (Acc) | 118,943.7 | 4.7% | 10.56% |
| US S&P 500 | 6,688.5 | 7.8% | 16.07% |
| Japan Nikkei | 44,932.6 | 11.0% | 18.49% |
| UK FTSE 100 | 9,350.4 | 6.7% | 13.52% |
| MSCI World (AUD) | 23,279.8 | 6.1% | 22.73% |
| German Dax | 23,880.7 | -0.1% | 23.57% |
| French CAC | 7,895.9 | 3.0% | 3.41% |
| HK Hang Seng | 26,855.6 | 11.6% | 27.07% |
| Shanghai Comp | 3,882.8 | 12.7% | 16.37% |
| ASX 200 Prop (Acc) | 85,649.5 | 4.6% | 4.10% |
| Global Prop | 2,982.4 | 4.3% | -0.37% |
| Australia 2Y Bond Yield | 3.49 | +28 bp | -15 bp |
| Australia 10Y Bond Yield | 4.30 | +14 bp | +33 bp |
| US 2Y Bond Yield | 3.61 | -11 bp | -3 bp |
| US 10Y Bond Yield | 4.15 | -8 bp | +37 bp |
| Commodities | Current Level | 3 Months | 1 Year |
| Gold (oz) | 3,859.0 | 16.8% | 46.47% |
| Oil (Barrel) | 62.4 | -4.2% | -8.51% |
| Iron Ore (Tonne) | 98.5 | 11.1% | -4.40% |
| Aluminium | 2,680.5 | 3.2% | 2.64% |
| Copper | 10,268.5 | 4.0% | 4.47% |
| Lead | 1,988.5 | -2.8% | -5.13% |
| CRB Index | 300.6 | 1.1% | 5.50% |
| Currencies | Current Level | 3 Months | 1 Year |
| AUD/USD | 0.6613 | 0.5% | -4.34% |
| AUD/EUR | 0.5636 | 0.9% | -9.21% |
| AUD/GBP | 0.4919 | 2.6% | -4.84% |
| AUD/JPY | 97.82 | 3.2% | -1.49% |
| AUD/RMB | 4.713 | 0.0% | -2.95% |
| ASX Indices | Current Level | 3 Months | 1 Year |
| S&P/ASX Small Ordinaries Index | 3,713.10 | 14.3% | 18.33% |
| S&P/ASX 200 Communication | 1,861.40 | 0.5% | 16.86% |
| S&P/ASX 200 Consumer Discretionary | 4,518.40 | 9.1% | 17.70% |
| S&P/ASX 200 Consumer Staples | 11,743.80 | -3.1% | -5.79% |
| S&P/ASX 200 Energy | 8,332.70 | -3.9% | -8.72% |
| S&P/ASX 200 Financials | 9,574.20 | 0.5% | 16.46% |
| S&P/ASX 200 Financial excluding A-REIT | 10,678.50 | 0.5% | 16.46% |
| S&P/ASX 200 Healthcare | 37,417.20 | -10.1% | -15.10% |
| S&P/ASX 200 Industrials | 8,470.60 | 1.8% | 13.75% |
| S&P/ASX 200 Information Technology | 2,927.50 | 0.9% | 7.73% |
| S&P/ASX 200 Materials | 18,815.70 | 18.6% | 2.72% |
| S&P/ASX 200 A-REIT | 1,863.20 | 4.0% | 0.82% |
| S&P/ASX 200 Utilities | 10,010.00 | 9.5% | 11.43% |
| World Indices | Current Level | 3 Months | 1 Year |
| MSCI World Value Index | 4,222.20 | 5.3% | 9.59% |
| MSCI World Growth Index | 6,764.28 | 8.4% | 21.63% |
| MSCI World Small Cap Index | 647.12 | 8.1% | 11.74% |
| MSCI World Large Cap Index | 2,761.84 | 7.5% | 16.60% |
| MSCI World Communication Services | 159.31 | 10.5% | 33.27% |
| MSCI World Consumer Discretionary | 499.48 | 8.1% | 15.83% |
| MSCI World Consumer Staples | 294.80 | -2.4% | -1.73% |
| MSCI World Energy Sector | 264.02 | 5.4% | 4.73% |
| MSCI World Financials | 221.30 | 5.0% | 25.09% |
| MSCI World Health Care | 362.03 | 2.7% | -9.29% |
| MSCI World Industrials | 493.12 | 4.4% | 16.14% |
| MSCI World Information Technology | 961.37 | 12.2% | 26.86% |
| MSCI World Materials Sector | 377.63 | 8.0% | 0.47% |
| MSCI World Utilities Sector | 195.74 | 4.6% | 9.38% |
Source: Morningstar, IRESS
