December 2025 Quarter in Review
The Australian ASX200 closed 1.52% lower at 8,714 over the December Quarter. Despite reaching a new all-time high in October amidst surging commodity prices, particularly gold, the market softened in November and December as interest rate speculation shifted towards possibility of higher interest rates. The market experienced divergence in sector performance with Resources outperforming and notably technology and consumer discretionary sectors lagging.
State of Australia
The Reserve Bank of Australia (RBA) remains focused on domestic inflation which is proving stickier than expected. The stubborn inflation forecast is not expected to return to target until late 2026 making further interest rate cuts unlikely until inflation is controlled. In summary inflation remains above target, Australia continues to grow moderately, employment market remains tight but is showing signs of weakness.
Limberg Asset Management Portfolio Positioning
The ASX200 market closed a volatile quarter trading over a 732-point range with elevated valuations based on future prospects garnering close attention particularly among the technology stocks. Of particular note in the technology sector was market darling WiseTech Global (WTC) which has reported governance concerns prompting investigations causing concern across all listed technology stocks and providing momentum to a sector rotation from tech to resources. Resource stocks like BHP, RIO and RXR outperformed the market driven by stronger commodity prices.
Limberg Asset Management portfolio movements traded in selective stocks over the quarter initially selling portions of holdings in stocks like MA Financial (MAF) on surging prices and redeploying or reducing portfolio cash levels by purchasing well run technology stocks when they pulled back during the quarter including Xero (XRO) and Technology One (TNE).
Income holdings in portfolios continue to deliver, recording another quarter of consistent monthly income. With the expectation of interest rates favouring neutral to higher interest rates we continue to selectively acquire income producing stocks from our watchlist at a discount to the value of the constituent assets.
We thank you for your trust and continued support over 2025 and we look forward to a prosperous 2026. We are, as always, here to help and happy to discuss our investment principles with anyone that could benefit from our services.