Economic Update – July 2025

The Australian share market delivered another strong return in July up (+2.4%), continuing to defy those who say it is overpriced. The 12 month return is now (+11.9%), the 3 year return (+12.1%) and the 5 year return (+12.3%). Excluding the Covid years, the Australian market is now the most expensive it has been in 30 years, and the US market is trading at a level not seen since 2003.

The best sector to invest in was Healthcare which jumped (+10.8%), Energy was also strong, up (+5.7%). Banks, which have been strong all year underperformed the market in July with Financials the only sector to go backwards (-0.6%).

Globally everything went up. The world share index delivered a return of (+2.1%). The US market lifted (+2.6%), the UK (+4.2%), Germany (+0.7%), France (+1.4%), China (+3.7%) and Japan (+1.1%).

The combined value of the Magnificent 7 technology companies hit a new record high of US$19 trillion in July. Nvidia became the first company to be worth US$4 trillion. That makes it more expensive than the combined value of the entire French and Italian share markets. 2 years ago the company was worth US$600 billion, but since then has risen 500%.

Microsoft also had a great month announcing an annual profit of US$101 billion. They are making 35 cents profit from every dollar they receive, but still found the need to make 15,000 employees redundant to keep costs under control.

House prices rose (+0.6%) for the 6^th straight month of gains. Perth (+0.9%), Adelaide (+0.7%) and Brisbane (+0.7%), were the strongest of the major cities for July. Those 3 cities also have the strongest annual growth returns.  National rental vacancy rates are at historical lows of 1.7% and rents are rising, but gross rental yields are still only 3.7%.

The unemployment rate dropped to 4.2%, while the Australian dollar rose (+2.4%) verses the US dollar. Annual inflation came in at 2.1% – the lowest figure since March 2021, allowing the Reserve Bank to cut rates to 3.6% earlier this month.

Iron Ore rose (+6.1%), Oil (+6.1%), Gold fell (-1.4%) and Bitcoin rose (+10.5%).