TWD Monthly Market Update – December 2025
Broader Market Moves1
Macro Commentary
The Australian share market exhibited modest volatility through December, ultimately finishing the month slightly positive as broader year-end positioning emerged. The S&P/ASX 200 oscillated before closing at 8,714.30 points on 31 December, marginally softer from mid-month levels but reflecting a modest uptick from early December lows. Materials and energy stocks led gains during a late month “Santa Claus” rally, with copper and other base metals supporting sentiment, while Technology and Financials remained pressured by mixed earnings and cautious forward guidance.
Australian macro data continued to highlight a tight labour market and persistent inflationary pressures. Employment growth remained solid in November, and the unemployment rate stayed low, reinforcing limited near-term easing prospects. CPI outcomes for November maintained above-target readings, with annual headline inflation remaining elevated and driven by costs in utilities and services. Against this backdrop, the RBA held the cash rate at 3.60% throughout December, and market pricing increasingly reflected a view that rate cuts are unlikely before the first half of 2026. In fixed income markets, government bond yields edged higher, while the Australian dollar traded in a narrow range, providing modest support to exporters.
Global equities delivered mixed returns in December. In the US, the S&P 500 hovered near record highs, finishing the year at 6845.50, capping a strong 16.88% advance for 2025, though the index softened into year-end. Technology names extended gains earlier in the month but gave back some ground as concerns over stretched valuations and earnings visibility persisted. Defensive and cyclically exposed sectors demonstrated relative strength amid heightened volatility. Broader economic data continued to point to resilience in the US economy, with labour market conditions and PMI readings remaining supportive and showing little evidence of a material slowdown.
Commodity markets remained a focal point for investors. Gold reached near record levels in late December, closing around US$4,315 per ounce, a standout performance that reflected persistent safe-haven demand and ongoing inflation concerns. Silver and other precious metals also recorded strong gains throughout the year. Oil prices (WTI) traded around US$56 to 57 per barrel late in December, balancing steady OPEC+ supply discipline against mixed demand signals from global growth indicators. Industrial metals exhibited divergent performance, with copper particularly strong amid infrastructure and decarbonisation narratives.
Looking into early 2026, investor sentiment is likely to remain cautious. In Australia, tight labour conditions and elevated inflation support the expectation that the RBA will maintain a prolonged period of steady rates, continuing to weigh on rate-sensitive sectors such as housing and consumer discretionary. Offshore, the combination of stretched equity valuations and mixed macro data underscores the potential for near-term volatility, even as the broader US and global economies display resilience. Commodity markets are expected to remain within established ranges, underpinned by geopolitical risks and ongoing supply discipline. As liquidity thins over the Northern Hemisphere holiday period, selective positioning in quality cyclicals linked to infrastructure, strong balance sheet commodity producers, and companies with pricing power remains a prudent strategy for investors.
1 ASX 200 refers to SPDR S&P ASX 200 Fund (STW), S&P 500 refers to iShares S&P 500 (AUD Hedged) ETF, MSCI World refers to Vanguard MSCI Index International Shares (Hedged) ETF, NASDAQ 100 refers Nasdaq 100 Currency Hedged ETF, AU Comp refers to the Vanguard Australian Fixed Interest Index ETF, Global Agg refers to Vanguard Global Aggregate Bond Index (Hedged) ETF, Gold (USD) refers to the LSEG Gold Spot Price (USD)
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