SWP Newsletter – July 2025
Wars in Europe and the Middle East, volatile oil prices and shifting US policies are making headlines but failing to dampen the optimism of the markets.
The ASX closed the financial year with a near 10% return – its strongest since the COVID-19 crisis and despite US tariff threats.
Australia is somewhat insulated from the tariffs, but concern lingers that the federal government’s $1.5 trillion invested in the US, faces a tax hike.
The tariffs are a bigger risk for the US economy, with inflationary risks from tariffs possibly prompting rate increases. Nonetheless, Wall Street remains upbeat. The S&P 500 index surged to a four-month high in June on hopes of further rate cuts and smooth trade negotiations.
In Australia, forecasts of further interest rate cuts have fractured since tensions flared in the Middle East, with some expecting a July cut and others now tipping August.
The Aussie dollar has climbed to a seven-month high, while the US dollar tumbled to a three-year low.
Oil prices posted their sharpest weekly declines after a spike during June as the Middle East conflict reached boiling point.