August 2025 Market Recap - Australia Outperforms the US

This article is for general information purposes and not financial advice or recommendation to take any action.

August brought renewed optimism to global markets, with equity indices across major regions posting gains.

The rally was fuelled by signs of improving economic conditions, falling inflation, and tentative progress in diplomatic negotiations over Ukraine.

For Australian investors, the local share market stood out, outperforming many global peers.

Equities climbed, with Australia leading the way

The ASX 200 rose +2.63% in August, slightly trailing the MSCI All World Index’s +2.68%, but ahead of the S&P 500, where stretched US tech valuations have left investors cautious.

With capital rotating away from overheated sectors, Australian equities benefited from relatively attractive valuations and strong dividend-paying companies.

Currency moves – a stronger Australian dollar

The Australian dollar strengthened +1.32% against the US dollar during the month.

Expectations of US Federal Reserve interest rate cuts later in 2025 weighed on the greenback, while Australia’s resilient labour market and stable inflation supported confidence in the AUD.

A stronger local currency benefits importers and travellers, though it can soften export competitiveness.

Commodities – energy under pressure

Not all asset classes joined the rally.

Energy-related commodities fell sharply, with oil down –7.58% and natural gas off –3.28%.

Rising supply, combined with cooling global demand, has weighed on prices. New US tariffs further disrupted energy trade flows, adding to the downward pressure.

Implications for Savers

For savers, August highlighted the value of diversification.

Australian equities offered resilience amid caution over US markets, while currency strength underscored the importance of FX exposure.

Meanwhile, weakness in energy markets served as a reminder that commodity cycles can move quickly when supply and demand dynamics shift.

Looking ahead

Heading into September, markets will be watching for:

• US Federal Reserve policy signals on rate cuts.
• Ongoing inflation and wage growth data in Australia.
• Developments in global trade policy and geopolitical stability.

Overall, August delivered a positive month for investors, with Australia well-positioned against a backdrop of global volatility.

‍The information in this article is intended to be factual though may also contain the opinion of the author. Whilst every effort has been made to ensure accuracy, we take no responsibility for any errors or omissions. Any opinions are those of the author alone and not a recommendation to take any action or obtain any product. You should consider whether this information is appropriate for you and obtain independent advice before making any decisions.

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