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June 2026 closed out a volatile financial year with global share markets advancing further. Unhedged global shares rose 3.1% in AUD terms in June, bringing 12-month returns to 15.0%, while hedged global shares were flat (0.0%) in June and returned 22.7% over the past 12 months.

Australian shares rose 0.7% in June, bringing 12-month returns to 6.1%. The local market continued to lag global peers, reflecting less exposure to the technology and AI themes that drove global indices, while earnings growth remained more subdued. Emerging market shares rose 2.4% in AUD terms in June, bringing 12-month returns to 35.8%. Changing expectations around Fed funds and a slightly firmer USD created a modest headwind during the month, although the global manufacturing and trade cycle remains supportive. Over the year, gains were driven by markets with direct exposure to the AI hardware cycle, particularly Korea and Taiwan. Hedged global listed property rose 1.9% in June, bringing 12-month returns to 14.3%. Hedged global listed infrastructure rose 2.2%, bringing 12-month returns to 16.6%. Australian listed property rose 1.7% in June, bringing 12-month returns to -2.2%, with the negative annual return largely due to a decline in Goodman Group.
 
The result has been another financial year of strong investment returns.
 
 
Source: Bloomberg, AMP
 
US payrolls rose by just 57,000 in June, which was half of expectations, and together with downward revisions to recent months. The urgency for a Fed rate hike has diminished. Markets are still factoring in at least one hike, but with less conviction. In Australia the May CPI data showed headline inflation falling from 4.2% to 4.0%, although core inflation rose to 3.6% from 3.4%, suggesting the RBA will still be biased to tighten. With house prices declining and employment growth weaker, markets have reduced their expectations of further tightening to just one more hike, to 4.6%.
 
There are a number of risks in the year ahead:
 
  • Global uncertainty around Iran, Ukraine and US foreign policy.
  • Public debt worries
  • The AI boom could turn into a bubble
  • In Australia the combination of RBA rate hikes and falling home prices on the back of the Budget tax hikes could threaten recession
These risks could easily trigger a new bout of volatility – potentially in the seasonally weak months of August and September and the period ahead of the US midterms has historically seen bouts of weakness. However, similar things could have been said in the last two years, and both financial years saw solid returns. In the absence of recession, solid profit growth and the Fed and RBA likely to cut rates next year should result in okay overall returns over the next 12 months. So, while we may see renewed volatility, super returns overall should be reasonable this financial year albeit after four years of returns around 9-10% some slowing is to be expected to around 6-7%. 
 
**Important Note**
While every care has been taken in preparing this document, Farrow Hughes Mulcahy makes no representations or warranties as to its accuracy or completeness, including forecasts. Past performance is not a reliable indicator of future performance. This document provides general information only and does not consider individual objectives or financial situations. Professional advice should be sought before making investment decisions.
 

Source: AMP Capital, Zenith, Pendal.