June 2025 Quarter in Review
The Australian ASX200 recorded a strong quarter closing 8.9% higher at 8,542 notwithstanding a sharp correction in April primarily caused by rising global tensions and President Trumps’ announcement of sweeping tariffs. Domestically, The Reserve Bank of Australia (RBA) cut interest rates again in May satisfied inflation is expected to remain within target parameters. The combination of easing concerns regarding President Trumps tariffs and lower interest rates spurred a strong quarterly return.
State of Australia
In May the RBA cut interest rate for the second time this rate cycle. Responding to increasing global uncertainty stemming from tariff uncertainty and political instability. However, the RBA held rates steady in July contrary to the Australian market’s expectations sighting more clarity around international developments with the worst outcomes considered highly unlikely and continued robust domestic employment in combination with contained inflation. The current interest rate remains at 3.85% which the RBA considers appropriate with current available information and providing scope for lower rates should global events prove detrimental to the domestic economy.
Limberg Asset Management Portfolio Positioning
The ASX200 bounced back to record new all-time highs during the quarter despite an uncertain global environment.
Pleasingly, Limberg Asset Management equity exposures broadly remained resilient against market turmoil. In April we took the opportunity of lower relative prices to selectively accumulate additional stocks within portfolios. In June, with prevailing elevated stock prices, Limberg Asset Management narrowed our focus by trimming outperforming positions where valuations appeared stretched. We are now assessing reinvestment opportunities among gold and phosphate companies focusing on valuation fundamentals.
In the income holdings of portfolios, we continue to engage with management focusing on the credit market cycle and the robustness and quality of their assets. The preference for a combination of listed and unlisted funds persists to balance returns and desired liquidity. The fund managers are cognisant of media speculation regarding quality of assets and the potential for loan defaults, to date these have proved unfounded within our selected managers.
We thank you for your trust and continued support and we look forward to assisting you in navigating a turbulent period in markets. We are, as always, here to help and happy to discuss our investment principles with anyone that could benefit from our services.