Market Update - Month Overview (July 2026)

Summarised by Shara Cox (Report via Zenith)

Australian Market Summary

Australian shares delivered a strong performance in July, rising 2.3%, outperforming many global markets. The local market was supported by gains in financial and energy stocks, while its relatively low exposure to technology companies helped shield investors from the global semiconductor sell-off. Over the past 12 months, Australian shares have returned 6.0%.

Economic data was also encouraging. Inflation continued to ease, with the June quarter CPI falling to 3.8% and the RBA's preferred trimmed mean inflation measure remaining at 3.6%. As a result, expectations for further interest rate rises softened, with markets now anticipating limited additional tightening and potential rate cuts in 2027.

Australian bonds declined 0.4% during the month as global bond yields rose, while the Australian dollar strengthened modestly to around US$0.70, supported by higher commodity prices and improved terms of trade.

International Markets:

Global markets experienced heightened volatility in July following the collapse of a Middle East ceasefire, which reignited US-Iran tensions and pushed oil prices sharply higher. At the same time, concerns about AI-related spending and future earnings triggered a significant sell-off in semiconductor stocks, with the Philadelphia Semiconductor Index recording its worst monthly decline in more than a decade.

Despite these challenges, developed market shares remained relatively resilient. Strong US corporate earnings and broader market participation helped offset weakness in large technology stocks. Hedged global shares rose 0.3% for the month, while unhedged global shares fell 0.9% in Australian dollar terms.

Emerging markets were among the weakest performers, falling 4.4%, with technology-heavy markets such as Taiwan and South Korea particularly impacted by the semiconductor downturn. Meanwhile, bond markets came under pressure as investors responded to escalating geopolitical risks and a more hawkish US Federal Reserve, which signalled that interest rate cuts may be delayed.

Oil was a standout performer, with Brent crude prices rising approximately 24% during the month, while gold remained largely unchanged. Overall, investors navigated a combination of geopolitical tensions, shifting interest rate expectations and changing leadership within equity markets.