“Steady as she goes ” January 2026

As the December 2025 quarter came to a close and we move into early 2026, markets once again remind us of an enduring truth of long-term investing: progress is rarely smooth, but resilience endures.

Over the quarter, markets moved through periods of consolidation rather than sharp directional shifts. Inflation continued to moderate across major economies, while central banks maintained a measured and patient stance. Rather than reacting to each new headline, markets spent much of the period absorbing prior adjustments and recalibrating expectations.

At EWK, we continue to approach this environment much like a seasoned captain navigating open waters — aware of changing conditions, respectful of risk, and guided by a clearly defined course. Short-term movements are acknowledged, but they do not dictate long-term strategy.

Our focus remains unchanged: to manage risk carefully, remain alert to opportunity, and ensure portfolios remain aligned with long-term objectives.

Market Pulse — Key Indicators (as at 31 December 2025)

  Quarterly observations

• Australian equities finished 2025 stronger, supported by moderating inflation, resilient corporate earnings, and a more settled interest-rate outlook. While returns lagged some offshore markets, performance remained constructive across the year.
• The Australian dollar remained broadly stable in the mid-0.60s, reflecting balanced global growth expectations.
• The Reserve Bank of Australia held the cash rate steady at 3.60%, signalling a transition away from aggressive tightening toward economic stability.
• Bond yields edged modestly higher, consistent with improving growth expectations rather than renewed inflation pressure.

Internationally, global equity markets closed the year positively despite persistent geopolitical and political uncertainty. Once again, economic outcomes proved more resilient than many traditional indicators and forecasts had suggested, reinforcing the value of diversification, discipline, and remaining invested through uncertainty.

The Long View — Equity Markets Through Multiple Cycles

Figure 1: Total Cumulative Return — ASX 200 vs S&P 500 (2007–2025)

Figure 1 illustrates how both Australian and global equity markets have progressed through multiple cycles:

• 2007–09: Global Financial Crisis — sharp declines tested investor confidence
• 2010–2019: Recovery and expansion — supported by low rates and earnings growth
• 2020: COVID-19 shock — rapid market fall followed by an equally rapid recovery
• 2021–23: Inflation and rate shock — rising rates challenged equity valuations
• 2024–25: Stabilisation — markets adjusted as inflation moderated

The key message is not which market performed best at any point in time, but that remaining invested through cycles has historically been rewarded.

Australia’s Interest-Rate Cycle — Recent History

Figure 2: Australian Cash Rate (%) — Recent Cycle (2007–2025)

Figure 2 shows how monetary policy has shifted over the past two decades:

• Pre-GFC interest rates were materially higher than those experienced in the past decade

• Rates declined steadily after the GFC, reaching historic lows during the COVID period

• From 2021 to 2023, rates rose rapidly in response to inflation

• By late 2025, policy settings stabilised at more neutral levels

This cycle highlights that interest-rate environments change, and investment strategies must adapt rather than assume any setting is permanent.

Australia’s Long-Term Interest-Rate History — A Multi-Generation Perspective

Figure 3: Australian Interest Rates — Long-Term Perspective (1950–2025)

Viewed across multiple generations, Figure 3 places today’s interest-rate environment into proper context:

• Post-WWII stability (1950s–1960s): Moderate and stable rates supported reconstruction and growth

• Inflation and volatility (1970s–1980s): Sharp increases were used to combat persistent inflation

• Structural decline and normalisation (1990s–2000s): Inflation targeting led to lower, more stable rates

• Ultra-low rates (2010s): An exceptional period following the GFC

• Rapid tightening and stabilisation (2021–2025): Swift increases followed by a return toward balance

This long-term view reinforces that today’s rates are not extreme, but part of a broader historical cycle.

Reflections as We Move into 2026

Looking across both market and interest-rate history, several enduring principles remain clear:

• Volatility tests resolve, not strategy. Investors who remain disciplined through uncertainty often emerge stronger.

• Diversification is the ballast. Spreading investments across asset classes and regions helps cushion market fluctuations.

• Patience compounds results. Wealth is built over years, not months.

• Purpose and planning are the compass. Clear strategy supports confident decision-making during changing conditions.

“Steady as she goes” is more than a phrase — it is a philosophy grounded in experience, discipline, and long-term thinking. As we move into 2026, our focus remains unchanged: to navigate changing markets calmly and deliberately, while keeping your long-term financial objectives firmly in view.

Sources and Market Data

Market information reflects publicly available data as at 31 December 2025.
Charts are illustrative and educational, designed to highlight historical patterns rather than replicate exact index performance.

Disclaimer

This information is of a general nature only and does not take into account your personal circumstances, objectives, or needs. Past performance is not a reliable indicator of future returns. Before acting on any information, please seek advice from a suitably qualified financial adviser.