Quarterly Market Commentary – Q2 2025

Prepared by Mark Cecil – Financial Planner, Zinc Wealth 

Setting the Scene 

The second quarter of 2025 reminded us that volatility remains a core part of investing. We saw a sharp correction in US shares early in the quarter, with the Morningstar US Market Index plunging close to 11% over just two days in early April. The driver? A fresh round of tariffs that rattled markets and raised concerns around global trade. 

While headlines like these can spark emotional reactions, our message to clients was simple: stay calm. Market turbulence isn’t unusual and history shows us that some of the best days for investment returns tend to appear shortly after the worst. Trying to time exits and entries often does more harm than good. 

Meanwhile, the so-called "Magnificent Seven" tech giants which have driven much of the US market’s strength over the past few years have started to diverge. In 2025 so far, four of these companies have lagged the broader market, with Tesla and Apple slipping into bear market territory. 

Back home, it’s been a different story. Despite the global wobbles, the Australian share market bounced back strongly. The Reserve Bank of Australia (RBA) also took further steps to support the economy, shifting into full easing mode and trimming interest rates again in May. 

Markets in Detail – to 30 June 2025 

Australian Equities 

After a lackluster quarter 1, local shares rebounded solidly. The S&P/ASX 200 Accumulation Index rose 9.5% for the quarter, lifting the 12-month return to 13.8%. Tech stocks led the way with a 26.9% gain, followed by strength in Financials (+15.7%), Telecoms (+14.5%) and A-REITs (+13.4%). Materials was the only sector in the red (-0.4%). 

Global Equities 

Global share markets also posted a strong recovery. The MSCI World ex-Australia Index returned 9.5% in local currency terms and 5.9% in Australian dollar terms, with the Aussie dollar gaining ground over the quarter. Information Technology, Communication Services and Industrials all produced double-digit gains. Energy and Health Care were the only major laggards. 

Emerging markets also enjoyed a solid quarter, especially in Industrials (+17.2%), IT (+13.0%), and Financials (+10.6%). Over the past 12 months, standouts have included Communication Services (+30.3%) and Financials (+24.1%). 

Bonds 

It was a mixed quarter for fixed income. Australian bonds edged up 1.0% (AusBond Composite Index), while global bonds (hedged to AUD) slipped 0.6%. Still, the 12-month return for global bonds remains strong at nearly 11%. 

Property & Infrastructure 

Australian listed property delivered a healthy 13.4% gain for the quarter, matching its 12-month return. Global property (hedged) posted more modest growth (+1.8% for the quarter), while global infrastructure added 6.7% in quarter 2 and 23.7% over the past year – a standout performer. 

Currency 

The Aussie dollar had a volatile ride dropping sharply against the US dollar in April before regaining ground to finish higher for the quarter. The RBA’s May rate cut (to 3.85%) helped shift market sentiment towards growth support rather than inflation control. 

Looking Ahead 

The US market’s sharp drop in April was a timely reminder of how quickly things can shift. But as we’ve said before: volatility is inevitable, and it’s how we manage through it that makes the difference. 

The local market's resilience was notable. By the end of June, the ASX was up 9% since March and close to its all-time high having shaken off the tariff-induced dip with surprising speed. 

On the economic front, the RBA’s change in stance is significant. With inflation trending down and GDP growth softening (just 1.3% over the year to March), the focus has shifted from taming inflation to avoiding economic stagnation. The labour market has held up mostly thanks to public sector hiring but underlying momentum remains weak. 

The big question now is not whether the RBA will continue to cut rates, but how far it will go. With the cash rate now at 3.85%, and the “neutral” rate estimated around 3%, we may see another few cuts before year-end. Market pricing suggests we could finish 2025 with a rate close to that 3% mark. 

That said, it’s a delicate balance. The RBA will be watching inflation data closely. The May figures showed annual inflation at just 2.1%, right at the bottom of the target range. While the trimmed mean, a more stable measure, was a touch higher at 2.4%, ongoing softness could push the RBA to act more decisively. 

At Zinc Wealth, our approach remains anchored in evidence, not emotion. Short-term market movements, whether they come from tariff shocks or central bank moves, don’t change the fundamentals of a well-constructed portfolio. 

If you have any questions about how these developments might affect your personal financial strategy, feel free to reach out. We're here to help you stay on course, no matter what markets are doing.