The InvestSense Podcast

With the financial year now in its closing weeks, this update doubles as both a wrap of the past week and a stocktake of how we have arrived here.

Get access to the graphs: www.investsense.com.au/industry-articles/nasdaq-up-40-korea-up-100-and-a-software-rebound---the-year-so-far-in-review 

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Markets ended the week clinging to hope. President Trump posted on Sunday that a deal with Iran would be "announced shortly", but by Monday morning negotiators were being told not to rush.

Learn more: www.investsense.com.au/industry-articles/hormuz-hikes-and-the-first-australian-crack  

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Markets in 2026 are a study in extremes. The AI-driven euphoria has lifted a narrow cohort of winners to unimagined highs, while a long tail of former tech market darlings have halved in value. For value-disciplined investors, this divergence is the opportunity set. Our conversation with Caroline Cai of Pzena Investment Management, a global value house we hold across many portfolios, neatly captured the current moment.

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Markets finished the week in a now-familiar pattern: US equities punched to fresh record highs on AI momentum, oil ground higher on Gulf supply concerns, and inflation re-accelerated across the developed world.

Get access to the graphs: www.investsense.com.au/industry-articles/us-30-year-yields-top-5-as-inflation-broadens-beyond-fuel 

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A lot has happened in a short window. Tuesday night's budget delivered the most significant tax reform package in a generation, and we have spent the last 48 hours working through what it means for adviser practice. The headline measures, replacing the 50% CGT discount with inflation indexation, a new 30% minimum CGT rate from 1 July 2027, and the limiting of negative gearing to new builds, will be canvassed exhaustively elsewhere. We have chosen to stay in our lane and focus on what it changes for multi-asset portfolios and equity selection.

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For Australian advisers the local story is the Federal Budget. Treasurer Chalmers delivered the long-flagged property tax reform: negative gearing now restricted to investment in new builds, and the 50% capital-gains discount replaced with indexation plus a minimum 30% tax rate (also waived for new builds). The 2026-27 underlying cash deficit prints  at $31.5 billion (roughly 1% of GDP), a $45 billion cumulative improvement on the forward estimates, though the 2026-27 cash balance remains at 2.1% of GDP. Markets took it in their stride; they are also waking up to the fact that the government is spending more despite the headline tax tightening, exactly the demand impulse Michele Bullock told us she does not want. The NAB Business Survey echoed the point: purchase costs surged to 4.5% in quarterly equivalent terms, three times February's level, while final product prices rose only 1.8%. Westpac consumer confidence fell from 90.6 to 80.1, the largest monthly drop since COVID.

Get access to the graphs: www.investsense.com.au/industry-articles/negative-gearing-hormuz-and-a-hotter-us-cpi-print 

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April was an extraordinary month for risk assets. The Nasdaq surged 16.3%, the Nikkei 16.6%, and the S&P 500 10.8% — both US indices closing at fresh all-time highs on Friday. The DAX added 7.1%, the FTSE MIB 8.9%, and even the ASX managed 3.0%, although it lagged as the RBA's hawkish posture weighed on sentiment. It was the S&P 500's fifth consecutive weekly gain, carrying it above its pre-war level — a rebound driven by a robust US earnings season (84% beat rate across 63% of the S&P 500 reported) and, as Andrew Hunt argued last week, an estimated US$300–400 billion per month in stealth liquidity  from the Fed, Treasury and PBOC combined.

Get access to the graphs: www.investsense.com.au/industry-articles/aprils-record-rally-meets-sundays-missile-strike-as-the-rba-hikes-to-4-35 

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Global equity markets have defied gravity since the Iran conflict erupted and Andrew Hunt of Hunt Economics thinks he knows why. In this week's video, Hunt argues that an estimated $300 to $400 billion per month in stealth liquidity injections is keeping risk appetite alive while the real economy deteriorates. The wave can continue a little longer, but Hunt warns at some point central banks will be forced to choose between supporting asset prices and fighting inflation, and history suggests the transition will be abrupt.

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The week that was supposed to deliver clarity on the Gulf crisis instead delivered its starkest divergence yet between US and European assets. With Brent crude surging 13% to US$108 — its highest since the conflict began — and the Strait of Hormuz still effectively closed, the transatlantic split in equity markets told a revealing story. The Nasdaq added 1.6% and the S&P 500 edged up 0.7%, buoyed by better-than-expected earnings and a remarkably resilient US consumer. In contrast, the Euro Stoxx 50 fell 2.0%, the FTSE 100 dropped 2.7%, and the ASX shed 2.1%. Japan was the week's standout, with the Nikkei rallying 2.9% on yen weakness and export optimism.

Get access to the graphs: www.investsense.com.au/industry-articles/oil-at-us-108-us-earnings-surge-and-europe-cracks 

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The traditional defensive playbook of shifting into government bonds and credit is under serious strain. With interest rate volatility effectively doubling over March and credit spreads offering limited cushion, the usual safe havens aren't behaving like safe havens. Christian Baylis of Fortlake Asset Management explains why cash may be the only truly defensive position right now, and what alternatives exist for portfolios that need more than that.

Learn more: www.investsense.com.au/industry-articles/the-defence-dilemma-why-hiding-in-bonds-isnt-what-it-used-to-be 

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