Global share markets rebounded strongly over the June quarter as investor confidence recovered following the March sell-off. Resilient corporate earnings and renewed enthusiasm for artificial intelligence drove a broad recovery in risk assets, while easing geopolitical tensions in the Middle East helped improve sentiment. Late in the quarter, a tentative US-Iran memorandum of understanding reduced concerns around energy supply disruptions, contributing to a sharp fall in oil prices. While this supported market sentiment, the agreement remained fragile, and uncertainty persisted around shipping routes and regional energy infrastructure. Against this backdrop, easing inflation concerns and interest rate expectations remained important drivers of market performance.
Australian shares delivered positive returns but lagged major global markets, with the S&P/ASX 200 Index rising +4.0%. Improving investor confidence supported broad gains across the market, led by consumer discretionary, information technology and materials, while industrials and real estate also recorded solid gains. In contrast, the sharp decline in oil prices weighed heavily on the energy sector, while healthcare also detracted following weaker sector earnings. Smaller companies participated in the recovery but slightly underperformed larger peers, with the S&P/ASX Small Ordinaries Index rising +3.3%.
International shares delivered exceptional gains, with the MSCI All Country World Index rising +13.6% unhedged and +14.9% hedged. US shares advanced strongly as robust corporate earnings and renewed optimism surrounding AI supported technology and growth sectors. European markets also delivered strong returns as easing energy prices and improving economic confidence lifted investor sentiment, while Japan benefited from a weaker yen, AI enthusiasm and resilient domestic conditions. Emerging markets outperformed developed markets, with the MSCI Emerging Markets Index rising +22.6%, driven by exceptional gains across Asia, particularly Korea and Taiwan. China was a notable exception, declining over the quarter amid ongoing concerns about its economic outlook. Global small companies also rebounded strongly, with the MSCI World ex Australia Small Cap Index rising +14.0%.
Property and infrastructure delivered positive returns over the quarter. Global listed property performed well, with the FTSE EPRA NAREIT Developed Index (hedged) up +8.8%, supported by improving sentiment towards interest rate-sensitive assets and lower bond yield volatility. Infrastructure also advanced, with the FTSE Global Core Infrastructure 50/50 Index (hedged) rising +2.6%, underpinned by its defensive earnings profile and continued demand for essential infrastructure assets.
Fixed interest markets delivered positive returns over the quarter. Australian fixed interest outperformed global peers, with the Bloomberg AusBond Composite 0+ Yr Index rising +2.6% as domestic bond yields declined. Global fixed interest also advanced, with the Bloomberg Global Aggregate Bond Index (hedged) up +1.5%, despite US Treasury yields finishing slightly higher over the quarter. Credit markets also delivered positive returns, with high-yield credit outperforming investment grade markets as resilient corporate fundamentals and tightening credit spreads supported investor demand for higher-yielding assets.
Australian shares were broadly positive. L1 Capital Long Short (+12.7%) delivered a very strong gain, led by cyclical recovery across travel, materials and building products. L1 finished the year with very strong performance (45.24%). Alphinity Australian Share (+3.0%) and Greencape Broadcap (+2.7%) rose modestly, with real estate, materials and financials providing support. Allan Gray Australia Equity (+1.4%) lagged, with substantial healthcare and energy exposure constraining returns despite an overweight in materials. However, Allan Gray provided strong performance for the year (+14.73%). Australian Eagle Trust (-1.2%) declined as weakness in long positions and gains among lower-quality shorts outweighed insurance and resources support. Macquarie Australian Small Companies (+2.2%) lagged, with lower exposure to the strongest-performing sectors limiting upside despite support from industrials.
International shares posted strong gains over the quarter. T. Rowe Price Global Equity (Hedged) (+17.7%) led the portfolio, driven by technology stock selection and AI infrastructure exposure. Artisan Global Discovery (+17.0%) delivered strong gains through health care, real estate and consumer discretionary selection. Arrowstreet Global Small Caps (+13.9%) produced a very strong return with broad contributions from information technology, industrials and financials. Life Cycle Global Share (+11.4%) benefited from overweights to financials, materials and emerging markets. Vinva Global Alpha Extension (+10.3%) provided a solid absolute return, supported by cybersecurity and semiconductor holdings. Barrow Hanley Global Share (+8.2%) lagged the growth-led rally due to its value bias and lower technology exposure. GQG Partners Global Equity (-4.5%) declined as an overweight to energy and underweight to technology outweighed favourable positioning in utilities and reduced China exposure.
Property and infrastructure assets gained over the quarter. Quay Global Real Estate (AUD Hedged) (+10.4%) rose in line with the broad global listed real estate rally. ATLAS Infrastructure Hedged (+5.1%) outperformed across regulated utilities, energy infrastructure and transport assets.
Fixed interest delivered solid returns. Western Asset Australian Bond (+2.8%) benefited from duration overweight and corporate and semi-government credit positioning. Yarra Enhanced Income (+2.3%) was supported by duration, credit spread compression and subordinated debt holdings. AB Dynamic Global Fixed Income (+2.5%) gained through investment-grade and high-yield credit selection. PIMCO Global Bond Wholesale(+2.3%) benefited from securitised asset exposure and Eurozone duration positioning.
Artisan Global Discovery and Arrowstreet Global Small Companies were trimmed and Vinva Global Alpha Extension introduced, broadening global equity exposure and reducing reliance on a small-cap recovery as the outlook for rate cuts and inflation has become more balanced.