Overview
The September quarter was positive for investors, with broad-based strength across most asset classes, especially equity markets. While there continues to be considerable uncertainty around various policies from the Trump Administration, many investors have become less concerned about the impact of tariffs on the economy and a possible
recession. Instead, there has been more positivity on strong company fundamentals, reasonable economic data, interest rate cuts and developments in Artificial Intelligence.
There continue to be geopolitical flashpoints, but to date, they have not had a durable impact on investment markets. The short but intense conflict that occurred in July between Iran and Israel raised the possibility of disruption to crude oil markets, but this was avoided after both sides moved towards de-escalation. The wars in Gaza and Ukraine have also continued to drag on, despite efforts from President Trump to bring about negotiated settlements. The risk of escalation has been generally estimated to be low; therefore, it has not been a major factor for investors.
Economic data in Australia and globally have continued to be quite resilient, although there is some evidence of a slowing economyp and weakening labour market evident in the US. The monthly US Non-Farm Payroll survey, which estimates the number of jobs created each month, has been trending down over the last year. In 2024, the US averaged 186,000 new jobs created per month, which supported the economy and was supportive of household spending. The most recent 3 months of data in 2025 show just 29,000 jobs created, showing that employers have substantially lower appetite to hire new workers, perhaps indicating the economy might weaken.
Within Australia, unemployment has remained low at 4.2%, and leading economic indicators such as the NAB Business Confidence Survey and Household Spending Indicator have continued to show modest improvements, which is a positive sign for the economy. This is despite ongoing pressures on households and businesses from inflation and cost-of-living pressure, which has been a drag on economic growth.
A higher-than-expected inflation number for the month of August has led to a downward revision in the number of expected rate cuts over the next 12 months from the Reserve Bank of Australia (‘RBA’), with the market now pricing in only a single 0.25% cut to the cash rate over the next 12 months.
Conversely, in the US, a weakening labour market has led to significant pressure on the US Federal Reserve to reduce interest rates, with expectations from the market for four more cuts over the next 12 months. This may continue to provide support to the Australian dollar relative to the US dollar, as lower interest rates are typically associated
with a weaker currency.
The Australian share market returned a respectable 5.3% in the September quarter. This included a volatile August reporting season, where many ASX-listed companies provided their full year financial results. August had a record percentage of companies moving plus or minus 5% on the day they released their financial results, totalling 46% of the
companies in the S&P ASX 200 Index. However, the S&P ASX 200 index also passed 9,000 points to make new record highs during that month, highlighting that strong returns can be seen alongside high uncertainty.
The best performing sector within Australian shares was the materials sector, returning 15.0% during the September quarter, with gold miners in particular performing well as gold prices continued to hit record highs. The healthcare sector was the weakest performer, returning -8.1%, following weak performance of healthcare stocks worldwide. The Trump administration’s threats to introduce tariffs on pharmaceutical products no doubt played a part, along with company specific issues, most notably for Australian pharmaceutical company CSL, which had its worst one day return since it listed in 1994, falling 16.9% after disappointing investors with its financial results.
Global equity markets were also strong, with the US equity market performing strongly, up 8.1% in USD, driven by its large and dominant technology sector, which continues to be the largest contributor to returns for share markets globally. Asian markets were also up sharply, with Japan, China and South Korea all with returns of greater than 10% in the
quarter. This has been due to similar thematics and sectors as the US Markets, with companies associated with advanced technology, semiconductor chips and AI being the best performers.
Gold has been one of the biggest movers in markets in 2025, supercharged by investors and central banks who are diversifying their portfolios away from USD and Euro-denominated assets and instead accumulating more gold, which cannot be seized by others. In recent months, investors have continued to direct more capital towards gold,
leading to a remarkable 16.3% during the quarter, moving closer to a symbolic $4,000 per ounce level. Other commodities such as silver and copper have also been strong performers, driven by thematics such as clean energy and electric vehicles.
Portfolio performance
All portfolios were positive in the September quarter, with the DB Australian Growth portfolio the best performer, benefitting from its overweight position in Australian small and mid-cap stocks, which performed very strongly compared to larger companies. All other portfolios also delivered strong performance, leading to a solid quarter for investors.
Portfolio changes during the quarter
There were no changes implemented.
Outlook
Markets remain supported by resilient company fundamentals and easing monetary policy across key economies, yet policy uncertainty continues to cloud the global outlook. Investor sentiment has improved amid greater policy clarity, yet geopolitical tensions and uneven global growth remain key sources of potential market disruption. In this environment, a patient, flexible investment approach anchored in fundamentals remains essential.