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As we navigate the complexities of the financial landscape, it’s important to stay informed about how investment markets are performing. The second quarter of 2025 (April 1 – June 30) presented both challenges and opportunities for investors. In this article, we take a closer look at how investment markets performed over the quarter, and we highlight some of the key economic factors from across the world that influenced these outcomes.
Australia
Share market: The S&P/ASX 200 Index, which represents Australia’s top 200 companies, was up +9.5% in Q2 2025. Positive returns were largely due to strong performance in the finance sector, driven by some of Australia’s major banks, while retailers and technology companies also saw strong returns.
Interest rates: Australia’s inflation rate remained within the Reserve Bank of Australia’s (RBA) target range at 2.4% in Q2 2025, down from 2.4% in Q1 2024. Core inflation, which excludes volatile items like food and energy, slowed from 2.9% in Q1 2025 to 2.79% in Q2 2025. The RBA reduced the cash rate from 4.10% to 3.85% during Q2 2025 but kept the rate on hold in July, despite markets expecting another cut. A further cut to 3.60% was made in August. Markets are currently expecting between one and two further rate cuts by the end of 2025.
Housing market: The Australian housing market, as measured by CoreLogic's Home Value Index (HVI), recorded an increase of +1.4% in Q2 2025, following a +0.9% increase in Q1 2025. The increase was attributed to falling interest rates, which have acted as a catalyst for renewed momentum.
Australian dollar: The Australian dollar (AUD) continued to recover against the US Dollar over Q2 2025, rising +5.2% to 65.5 cents. The increase comes off the back of a sharp drop in the AUD towards the end of 2024, that was mainly caused by shifts in US and Australian interest rate expectations and a negative outlook for the Chinese economy, which has impacted Australia's export sector.
New Zealand
Share market: The S&P/NZX 50 Index saw a +2.7% rise in Q2 2025, with the positive return due to strong performance in key health care and communications companies.
Housing market: Following minor monthly falls of -0.1% in both April and May, the CoreLogic Home Value Index showed a +0.2% gain in June 2025, meaning that prices over the quarter remained stable. The median property value nationally is now NZ$815,389.
Interest rates: The official cash rate was reduced from 3.75% to 3.25% during Q2 2025, with the market expecting a further reduction to around 3.00% by the end of 2025. New Zealand’s economy, which was in recession in Q2 and Q3 of 2024, exited recession in Q4 2024 as the economy began to grow again, helped by the recent reduction in interest rates, and the growth continued in Q1 of 2025. Inflation has risento 2.7% in Q2, towards the upper end of the RBNZ’s target range of 1% to 3%.
United States
Share market: The S&P 500 Index rose by +10.9% in Q2 2025, as volatile share markets recovered from the uncertainty around tariffs. As fear around tariffs faded, tech companies that had seen negative returns in Q1 experienced a sharp rebound in Q2 2025.
Interest rates: The Federal Reserve has kept interest rates on hold at 4.5% in all its meetings so far in 2025. This is in line with the Fed’s goals of achieving maximum employment and price stability. The Personal Consumption Expenditures (PCE) inflation rate stood at +2.6% at the end of June, while core inflation stood at 2.9%.
China
The Chinese share market saw muted but positive performance in Q2 2025, underperforming global shares in general. Sentiment has been helped in Q2 as China and the US agreed to cut their respective tariff rates. However weak domestic economic data in China has continued to hamper Chinese share market performance. The government continues to provide financial support to the economy, and economic growth was 5.2% in Q2 2025, down slightly from the 5.4% recorded in both Q4 2024 and Q1 2025.
Global trade and geopolitical uncertainty
Q2 2025 started off with a sharp selloff in financial markets, in response to the unveiling of severe tariffs by the US administration on global trading partners. However, investors’ fears receded later in the quarter as tariffs were paused for 90 days, and a trade deal was reached between the US and China. Later in the quarter there were elevated levels of uncertainty as conflict broke out in the Middle East, but the market reaction was muted, and tensions quickly subsided.
We continue to monitor the major drivers of markets and their impact on Resolution Life Australasian portfolios. While investing always involves managing uncertainty, the current environment is mired in elevated uncertainty. The best form of defence for portfolios is to continue to be well diversified, with exposure to a range of asset classes that can help during volatile times.
Sources:
1. S&P/ASX 200 Index Performance - ASX
2. NZX 50 Index Performance – NZX
3. S&P500 Index Performance - US
4. Reserve Bank of Australia Monetary Policy - RBA
5. Reserve Bank of New Zealand Official Cash Rate - RBNZ
6. Australian House Prices – CoreLogic
7. NZ house Prices – CoreLogic Home Value Index
8. Australian Bureau of Statistics - ABS
9. FactSet
10. Bureau of Economic Analysis – BEA
11. Trading Economics
What you need to know
Preparation of this document and the opinions expressed in it may involve material elements of subjective judgement and analysis. Unless specifically stated otherwise they are current as of 19 August 2025 and are subject to change without notice. Resolution Life does not make any representation or warranty as to the accuracy, reliability or completeness of information and does not accept any liability or responsibility for any acts or decisions, errors or omissions related to the information in this document.
For Professional Financial Advisers Only – Not for distribution or disclosure to retail or wholesale clients.
The information contained in this document is only for professional financial advisers acting in that capacity and does not contain any financial product advice. Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life) can be contacted via resolutionlife.com.au/contact-us or by calling 133 731
Links to sources
Modest value growth in NZ property re-emerges in June | CoreLogic New Zealand
Consumer Price Index, Australia, March Quarter 2025 | Australian Bureau of Statistics
Personal Consumption Expenditures Price Index | U.S. Bureau of Economic Analysis (BEA)
Important information
Where the information on this website is factual information only, it does not contain any financial product advice or make any recommendations about a financial product or service being right for you. Any advice is provided by Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life), is general advice and does not take into account your objectives, financial situation or needs. Before acting on this advice, you should consider the appropriateness of the advice having regard to your objectives, financial situation and needs, as well as the product disclosure statement and policy document for the product. Any guarantee offered in the product is only provided by Resolution Life. Any Target Market Determinations for our products can be found at resolutionlife.com.au/target-market-determinations.
Resolution Life does not make any representation or warranty as to the accuracy, reliability or completeness of material on this website nor accepts any liability or responsibility for any acts or decisions based on such information.
Resolution Life can be contacted at resolutionlife.com.au/contact-us or by calling 133 731.
