We would like to acknowledge the horrific events that unfolded at Bondi Beach last night. Our thoughts are with the victims, their families and all those who have been affected.
Market update
Last week, the S&P/ASX 200 Accumulation Index rose 0.7%, led by materials (+2.8%) and financials (+1.7%). The S&P/ASX Small Ordinaries Accumulation Index also gained 0.7%.
The Reserve Bank of Australia kept interest rates on hold at 3.6%, with Governor Michele Bullock noting that she doesn’t expect further rate cuts for the foreseeable future. The unemployment rate held steady at 4.3%, while underemployment climbed to a 12-month high of 6.2%. Meanwhile, Australia’s Treasury doubled its forecast for 2025–26 business investment, lifting expectations from 1.5% to 3% on anticipated spending in energy transformation, data centres and software.
In the US, the S&P 500 Index declined 0.6%, while the Small Cap 600 Index rose 2.0%. Markets were buoyed by the Federal Reserve (Fed) lowering its interest target rate to 3.50%–3.75% as was widely expected. The decision was not unanimous, with three of 12 policymakers dissenting for the first time in six years including two favouring no change and one preferring a 50-basis-point cut. The policy statement included commentary about growth and inflation that appear supportive of a pause. Economic data remains mixed; initial jobless claims rose by 44,000 to 236,000, the highest weekly total since early September, while continuing claims fell by 99,000 to 1.838 million, the lowest since mid-April. Markets were also influenced by margin concerns and growing caution around artificial intelligence (AI) linked names after Oracle (NYSE: ORCL), missed revenue estimates and flagged a substantial increase in capital expenditure.
The MSCI World Index (AUD) decreased by 0.4%. China’s trade surplus topped US$1 trillion for the first time, with exports to Australia growing 35.8% year-on-year in November, highlighting China’s ability to diversify away from the US. India, the world’s fifth largest economy, grew its GDP by 8%, driven largely by public spending, which hit a 12-year high at 8.4% of GDP.
In commodities, silver prices hit a record high above US$60, up about 100% this year, driven by a supply shortage and strong industrial and investor demand. Brent crude oil fell 4.1% over the week.
Looking ahead, focus will be on a delayed US labour market report, speeches by Fed officials, and rate decisions by the European Central Bank, the Bank of England and the Bank of Japan. In Australia, we will be watching the Westpac Consumer Sentiment Index and the December flash Purchasing Managers’ Index.
Stock watch
BHP (ASX: BHP)
BHP has signed a binding agreement with Global Infrastructure Partners (GIP) to set up a trust that gives GIP access to BHP’s share of the Western Australia Iron Ore (WAIO) inland power network. GIP will pay US$2 billion to receive 49% of a tariff linked to BHP’s share of the power network over 25 years, with BHP retaining full operational control. Completion is expected by the end of FY2026, subject to approvals. Analysts forecast that the deal will add approximately US$800 million (A$0.23 per share) in value for BHP. It reflects BHP’s ability to use cheaper external capital to unlock value from existing infrastructure and could signal the start of similar arrangements. The outcome should help balance gearing, free up capital for higher return projects, fund near-term shareholder returns and potentially lead to a re-rating of the valuation multiple. We believe Rio Tinto (ASX: RIO) could do the same on a larger scale.
Held in: WAM Leaders (ASX: WLE), WAM Income Maximiser (ASX: WMX) and Wilson Asset Management Leaders Fund
Flight Centre Travel Group (ASX: FLT)
Flight Centre Travel Group has agreed to acquire Iglu, the UK’s leading cruise travel agency, for up to £127 million (around A$255 million). About £100 million (A$200 million) will be paid up front, with the remainder tied to performance. Iglu specialises in cruises (around 90% of its business) and ski holidays, holding more than 15% of the UK cruise market, including over 75% of online bookings. Both Flight Centre and Iglu have been growing cruise revenue at 15–20% per year. The acquisition is expected to deliver approximately £450 million (A$900 million) in bookings and £14.8 million (A$29.6 million) in operating profit in FY2026. Flight Centre has also raised its profit guidance for FY2026 by $10 million, now forecasting an underlying profit before tax of $315–350 million.
Held in: WAM Capital (ASX: WAM), WAM Active (ASX: WAA) and Wilson Asset Management Founders Fund
Synopsys (NASDAQ: SNPS)
Synopsys, the global leader in electronic design automation software and semiconductor intellectual property, posted strong fourth-quarter results with FY2025 revenue up 15% year-on-year, ahead of expectations. Management provided strong guidance for FY2026, supported by its recent acquisition of Ansys, which expands its total addressable market. As the rising complexity of AI-driven chip design drives research and development spending and agentic AI opens new monetisation opportunities, Synopsys is well-positioned for long-term growth. We see potential catalysts from future earnings beats and valuation upgrades as the market fully recognises this thesis.
Held in: WAM Global (ASX: WGB)
Western Avenue, Melbourne Airport (Wentworth Capital)
206-300 Western Avenue, Melbourne Airport is a distressed Melbourne logistics asset. The site was previously closed in 2008 due to environmental concerns and has since been remediated by WAM Alternative Assets’ real estate partner Wentworth Capital. The asset offers an attractive industrial location, as it adjoins the Melbourne Airport (Tullamarine) and is in close proximity to core infrastructure. Wentworth acquired the asset at a substantial discount to surrounding industrial land values, with an immediate three-year leaseback to the vendor, providing instant holding income. Further upside is expected from the resolution of planning and environmental issues that were not addressed under the prior vendor’s ownership. As such, WAM Alternative Assets expects to benefit from the asset’s remediation and development into a premium grade and multi-let logistics estate.
Held in: WAM Alternative Assets (ASX: WMA)
Understanding financial correlations and what it means for investors
Portfolio Strategist Damien Boey argues bonds and shares are increasingly moving in sync, weakening traditional diversification (including the 60/40 split) and exposing risks in passive portfolios. He also explains how ‘financial plumbing’ such as the levered basis trade, supported by central-bank liquidity, helps keep yields and volatility low and why private credit is crucial to funding the AI investment cycle. Read the full article for what these shifts mean for diversification and portfolio resilience going forward on Livewire here.
Index returns performance table
