Reflections on the 2024–25 Financial Year: Markets, Conflict, and EOFY Strategy

As we approach the close of the 2024–25 financial year, investors and everyday Australians alike are taking stock of a year marked by resilience, volatility, and geopolitical tension. From the performance of global equities to the unique dynamics of the Australian share market, this year has offered both opportunities and cautionary tales.

Global Markets: A Rally Against the Odds

Despite persistent warnings of recession and geopolitical instability, 2024 was another strong year for global equities. Approximately 80% of global share markets posted gains, with the U.S. leading the charge thanks to continued strength in big tech and a supportive monetary policy environment [1]. Even amid inflation concerns and interest rate fluctuations, investor sentiment remained surprisingly buoyant.

However, the shadow of conflict loomed large. The escalation of hostilities between Israel and Iran, and the subsequent involvement of the United States, sent ripples through global markets. Oil prices spiked briefly as fears of disruption in the Strait of Hormuz emerged, but markets quickly stabilized, suggesting that investors are becoming more desensitized to geopolitical shocks—at least in the short term [2].

Australia: A Tale of Two Markets

Back home, the Australian share market delivered a mixed but ultimately positive performance. The ASX All Ordinaries Index rose by 8.27% over the financial year, outperforming its long-term average [3]. However, this headline figure masks a more nuanced story:

• Banks and Financials were the standout performers, buoyed by stable earnings and strong investor demand.

• Technology stocks surged, reflecting global enthusiasm for AI and digital transformation.

• Resources and Energy sectors lagged significantly, dragged down by falling commodity prices and weaker demand from China [4].

The Australian dollar also weakened against the U.S. dollar, reflecting global risk aversion and the economic uncertainty tied to the Middle East conflict [2].

Geopolitical Tensions: The Iran-Israel-US Triangle

The conflict between Israel and Iran, with the U.S. playing a strategic role, has had a muted but notable impact on markets. While the immediate economic fallout was limited, the situation remains fluid. Any escalation could disrupt energy supplies and global trade routes, particularly if Iran follows through on threats to block the Strait of Hormuz—a critical chokepoint for global oil [2].

Investors should remain vigilant. Geopolitical risks are notoriously difficult to price, and while markets have shown resilience, complacency could be costly.

EOFY Reflections: What You Should Be Doing Now

As June 30 approaches, here are some timely reminders and tips to help you wrap up the financial year wisely:

✅ 1. Review Your Investment Portfolio

• Rebalance if needed—especially if you're overexposed to underperforming sectors like resources.

• Consider taking profits from high-performing sectors like tech or banks.

✅ 2. Maximise Super Contributions

• Make concessional (before-tax) contributions up to the annual cap.

• Consider non-concessional (after-tax) contributions if you’re looking to boost your retirement savings.

✅ 3. Check for Tax Deductions

• Prepay expenses where possible (e.g., interest on investment loans).

• Claim deductions for work-related expenses, charitable donations, and investment costs.

✅ 4. Capital Gains and Losses

• Offset capital gains with any realised losses.

• Be strategic about which assets to sell before June 30.

✅ 5. Plan for the Year Ahead

• Set clear financial goals for FY 2025–26.

• Stay informed about interest rate changes, inflation trends, and global risks.

Final Thoughts

The 2024–25 financial year has been a reminder that markets are complex ecosystems, driven by fundamentals, sentiment, and the unpredictable nature of global events. While Australia’s market has shown resilience, the divergence between sectors and the looming spectre of geopolitical conflict underscore the importance of diversification and strategic planning.

As always, the best approach is to stay informed, stay calm, and stay focused on your long-term goals.