Monthly Market Commentary
As at 30 September 2025
Economic Overview
Australia
Australian GDP better than expectations
The RBA left rates unchanged at 3.6% at the September meeting, adopting a cautious stance.
Even though Australian unemployment rate remains at 4.2%, indicating full employment; the labour market shows signs of softening, with 5,400 jobs lost in August. There was a noticeable shift from full-time to part-time positions and the participation rate fell to 66.8%.
Australian Q2’25 GDP grew at 0.6%, slightly above market expectations. This stronger growth partly reflects a rebound from the weaker performance in Q1’25, which was impacted by tropical cyclone Alfred.
The latest S&P Global Australian PMIs indicates an economy continuing to grow below trend. The manufacturing PMI fell to 51.6 from 53.0, while the services PMI fell to 52.0 from 55.8. The survey reported a slower rise in new orders, and a decline in business optimism.
International
US labour market continues to soften
The US Federal Reserve cut interest rates by 25bps, in line with expectations, lowering the Fed funds rate to 4%-4.25%. The BoC cut its policy rate to a 3-year low of 2.5%, citing weakness in the jobs market and less upside risks to inflation. The BoE’s Monetary Policy Committee (MPC) voted by 7-2 to keep its policy rate unchanged at 4%, with two members voting for a 25bps cut, and the BoJ kept the policy rate unchanged at 0.5% in the September meeting.
The US labour market continued to soften, with payroll data for August showing 22,000 jobs added, below market expectations of 75,000. Also, revisions to the prior two months’ payroll data reduced the June and July data by a further -21,000.
NZ economic growth slowed significantly in Q2’25, as global geopolitical tensions derailed NZ’s recovery from last year’s recession. NZ GDP fell by -0.9% QoQ in Q2’25, whilst expectations were for a smaller decline of -0.3% QoQ. A further two rate cuts are now expected in 2025.
French Prime Minister Bayrou lost a confidence vote in the lower house with 65% of parliament members voting against him. Within 24 hours, President Macron nominated Sebastien Lecornu as the new Prime Minister.
Market Review
International shares edged higher
International shares (hedged) gained 3.3% in September, as several international central banks cut interest rates despite ongoing weakness in the US labour market data. Information technology was the best performing sector in September, up 7.5%, as the big US tech stocks performed strongly.
Emerging market shares were up 5.8%, led by strong gains in China’s technology sector. Brazil also performed strongly over the month.
Small cap shares performed strongly in September, up 3.4%, reflecting the better valuation in this sector.
Australian shares underperformed international shares
Australian shares fell -0.7% in the month, as expectations for interest rate cuts were lowered following stronger than expected economic growth data.
Commodities higher, precious metals have strong returns
Precious metals had a strong month; gold climbed 10.1%, while silver was up 16%.
Australian listed property underperformed the broader market
Australian listed property was down -2.9% in September, with most stocks in the sector posting negative returns. Adjustment to interest rate expectations and a slightly more hawkish stance by the RBA, likely impacted the interest sensitive sector.
Australian dollar continues to climb
The Australian dollar appreciated 1.1% against the US Dollar in September, after reaching its highest level since 2024. Strong economic growth data in Australia and a softer labour market in the US contributed to this.
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