July In Review: Rotation Into A New All-Time High

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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Another positive month for the ASX200 with lots going on underneath the surface, as resources were back in and banks were out, while mid-caps continue to outperform.

-ASX200 rallies to fresh all-time record intra-day high in July
-Iron Ore, lithium and energy stocks drive ASX200 gains in July
-Healthcare rebounds as CSL, ResMed and Pro Medicus rally
-Gold Miners lag while uranium stocks rally before Boss Energy's shock
-MidCaps continue to outperform but Small caps chip in

By Danielle Ecuyer

No meme stock mania but lots of love for resources in July

“Another strong month for risky assets. Meme stocks are flying, IPOs are hot again, markets indifferent to headlines, and complacency seeping in over the quiet summer months of the Northern Hemisphere.”
GF Asset Management Insights – July 2025

While corollaries with Wall Street’s animal spirits in July are relatively thin, the ASX200 was no slouch in the month of July, rising 2.35%, pushing the seven-months to July 31 year-to-date performance to 7.1% (ex-dividends).

One could be forgiven for thinking the April Liberation Day’s -20% correction even occurred. To quote Monty Python’s Black Knight: “It’s just a flesh wound”.

Jokes aside, the recovery in the ASX and global equity markets has been one of the fastest and most robust V-shaped recoveries on record, which has many questioning the durability of rallies into the often more treacherous months of August and September.

For domestic investors, the ASX200 has paced well over the year-to-date compared to the S&P500, up 7.78% (in USD terms), while the Nasdaq has rallied 9.38%.

In Australian dollar terms, it is worth highlighting the appreciation of the little Aussie battler –or the depreciation of the USD, depending on your narrative– which has compressed year-to-date S&P500 returns in AUD terms to a mere 2.96% for the period, according to S&P Global as at August 4, or 7.62% in US dollar terms.

A reminder that offshore investing is as much about currency calls as it is stock and index calls.

In other markets, the Hang Seng is up 23.5%, the DAX30 up 20.88% year-to-date, with the FTSE100 rallying 4.24% in July to a year-to-date return of 11.74%.

When looking under the hood, the UK market’s strength in July reflects in part similar dynamics to the local market due to the high index weighting to energy, materials, and metals stocks.

The ASX200 set a new all-time record high of 8776.4 (intra-day) on the 18th July. New records in the month were also achieved by the FTSE100 in London and Egypt’s EGX30.

Over in the US where the bull market for equities has a much stronger AI connection, both the S$P500 and Nasdaq100 rallied into multiple new record highs throughout the month.

China stimulus and growth story dominates with laggards

As depicted by Macquarie, the key theme for July was the rotation out of leaders into laggards, which is often characteristic of a new financial year. Value outperformed Growth by 1.8%, and Quality was an even more robust factor, outperforming Value by 3.8%.

In the US, Growth outperformed both Value and Quality by 3.4%. One look at Nvidia and Microsoft’s performance, with both companies achieving the US$4trn market capitalisation level in July, offers more than a hint of why technology growth stocks outperformed.

While not wanting to dwell on these AI/Cloud behemoths, one trillion equals 1,000,000 millions—or in their case, 4,000,000 millions. Mind boggling!

But size doesn’t always matter, and in this case market capitalisation, with Australian resource sectors finding their day in the sun over July.

A rise in the iron ore price of 6.5% over the month, to just under US$100/t, boosted Australian iron ore stocks. Fortescue ((FMG)) rallied 16%, supported by a better-than-expected June quarter earnings report. Mineral Resources ((MIN)) also announced a better-than-anticipated 4Q25 report, catching the tailwinds of positive sentiment on iron ore and a standout rally in lithium stocks, rising 33% over July. Pilbara Resources ((PLS)) added 20%, while Woodside Energy ((WDS)) shares rose 13%.

Whitehaven Coal ((WHC)) lifted, and as Macquarie points out, China’s market added 3.5% with renewed hopes of fiscal stimulus including the development of the world’s largest hydropower dam in southeastern Tibet, with an estimated investment of US$167bn–US$170bn. The largest dam to be constructed by scale and cost in history.

On number crunching by Morgan Stanley, the ASX100 Resources outperformed Small Resources by 8.9%.

Healthcare stocks were also beneficiaries of the rotation out of banks, with the latter sector down -1.3%. Healthcare advanced by 8.7%, led by heavyweight CSL, up 13%, despite US pharmaceutical tariff threats, which remain unresolved.

Healthcare added 82.1bps and Materials 72.7bps to the ASX200 index performance for the month.

For healthcare stocks, July marked a welcome reversal of underperformance for 2025. Pro Medicus ((PME)) joined the rally, up 13%, and ResMed shares advanced 8% into its FY25 results announced on August 1, which lent further support to the share price on better-than-expected earnings, resulting in EPS forecast and target price upgrades.

Notable underperformers in July included the gold sector, despite a slight rise in the gold price. Shares in Northern Star ((NST)) and Evolution Mining ((EVN)) fell by -16% and -9%, respectively.

In contrast, Newmont Corp ((NEM)) continued its turnaround post the Newcrest acquisition in October 2023 and asset divestment program. The stock rose 11% after reporting an earnings beat and a lift in share buyback.

Uranium stocks rallied sharply on the Sprott Physical Uranium Trust’s US$200m capital raising and inventory build-up in the U308 spot market over the beginning of July. For more details, check out FNArena’s Uranium Weekly ( https://fnarena.com/index.php/2025/08/05/uranium-week-supply-challenges-are-mounting/ ).

But profit taking moved in with Boss Energy’s ((BOE)) shock FY26 guidance update, bringing into question the mineral resource and nameplate capacity for Boss’ Honeymoon project, and saw the stock fall -63%.

Paladin Energy ((PDN)), which has had a list of water and stockpile ore quality issues over the year past, also disappointed the market with lower-than-anticipated FY26 guidance. Its shares retraced -23% in July.

Which stocks moved or subtracted from the index

Picking through the index lifters and leaners over the month, Morgan Stanley details CSL added 58.8bps and BHP Group ((BHP)) 49.7bps; both are the two main contributors to Healthcare and Materials.

Woodside added 21.7bps to Energy, while ANZ Bank ((ANZ)) bucked the financials trend, adding 18.1bps.

Banks subtracted -34.1bps, with CommBank the heaviest detractor at -44.7bps, and Macquarie Group ((MQG)), with a disappointing AGM update, removing -15.6bps, while National Australia Bank ((NAB)) detracted -5.4bps.

By the end of July, the rotation into resources had started to fade, with Rio Tinto’s ((RIO)) June quarter result underwhelming.

For investors with more of a small-cap penchant, the ASX Small Ordinaries rose 2.24% and is up 5.69% year-to-date — still trailing both the All Ordinaries and ASX200.

Investors gravitated to the ASX MidCap 50, rising 4.24% for July and up 10.45% year-to-date.

Notable names of recovery stocks included Mesoblast ((MSB)), up nearly 44%, and turnaround stories AMP Ltd ((AMP)) and Magellan Financial Group ((MFG)), rallying circa 27% and 25%, respectively. Former favourites Lifestyle Communities ((LIC)) and HMC Capital ((HMC)) fell -27% and -23%, respectively.

What’s in store for August and FY26 outlook

Much of where the ASX200 goes will depend on not only overseas markets, but the August reporting season.

In terms of seasonality, August and September are usually characterised by volatility and weakness.

August has already started with a volatile bang, living up to the historical norms as liquidity and volumes fall in the northern summer holiday season.

Macquarie points to September as usually the worst month for returns and August the third worst. Will seasonality play out again this year, the broker asks?

With the RBA shocking markets in July with a surprise ‘hawkish hold’ instead of the priced-in -25bps cut in the cash rate, the market is now looking for some central bank relief at the upcoming August RBA meeting (August 12 at 2.30pm AEST), with -25bps expected.

What happens after that remains a point of contention amongst economists, with some dialling back rate cut expectations for this cycle. President Trump’s global tariffs are yet to be felt in terms of inflation impacts.

Nevertheless, both Macquarie and Morgan Stanley flag an expectation of domestic and earnings growth picking up into FY26, which would infer any pullbacks throughout reporting season are most likely a buying opportunity.

Morgan Stanley explains earnings estimates going into August are already “subdued,” with consensus forecasts placing average EPS growth at a negative -1.7%. Compared to the FY22 peak in earnings estimates, the current FY25 consensus sits -18.3% lower (over three consecutive years of negative growth).

Macquarie’s bottom-up forecast EPS growth is for a decline of -3.2%. The broker’s analysts are currently anticipating a rebound of EPS growth in FY26 by 2.2%, relatively modest compared to forecasts by peers.

One of the most important index bellwethers to report is CommBank with FY25 earnings due out on August 13. The UBS strategist has been emphasing the bank’s valuation has been impacted by market flows and investor positioning, with over 90% of the price performance over the last two years coming from multiple expansion only.

The main area of focus for the market is whether CommBank can exceed consensus expectations based on an 8.4% rise in EPS revisions over the last year, with UBS stressing management has levers to pull to surprise the market. Nevertheless as such an index heavyweight, around 11.5% of the ASX200, how investors interpret the report may have some bearing on both sentiment and direction of the index this season.

The big question for the market leading into the August reporting season is ‘has the bar (earnings forecasts) fallen far enough for investors to be delivered some positive surprises?’

To stay in touch with all broker updates throughout August reporting season, remember to check out FNArena’s Corporate Results Monitor (https://fnarena.com/index.php/reporting_season/), which will be updated daily.

With valuations on the market set at a higher bar –Morgan Stanley has a 12-month forward price-to-earnings ratio of 19.2 times– share price support will most likely have to come from earnings forecast upgrades rather than multiple expansion.

A return to earnings growth of between 5%-8% is flagged by Morgan Stanley over the coming years (FY26–FY27).

In terms of equity sentiment, Macquarie’s FOMO Meter indicates positive sentiment at plus 0.7, with bullish individual investors up plus seven net bullish in July. On Macquarie’s assessment, the FOMO meter is high, though not excessive.

There was also more robust market depth over the past month, although active investors cut equity exposure to plus 77pta, down -4 to -5ppt in July.

ASX100 Best and Worst Performers of the month (in %)

ASX200 Best and Worst Performers of the month (in %)

ASX300 Best and Worst Performers of the month (in %)

ALL-TECH Best and Worst Performers of the month (in %)

All index data are ex dividends. Commodities are in USD.

Australia & NZ

The World

Metals & Minerals

Energy

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