To The Moon

1. $S&P/ASX 200(XJO.AU)$ Hit All Time High on Monday

The $S&P/ASX 200(XJO.AU)$ has reached multiple all-time highs in 2025, driven by sector rotation and optimism around monetary policy, with Materials, Technology, and Utilities leading recent gains.

Below are the star ASX companies by returns in 2025: $MEDIBANK PRIVATE LTD(MPL.AU)$ , $QANTAS AIRWAYS LIMITED(QAN.AU)$ , $ORICA LTD(ORI.AU)$ , $WESFARMERS LTD(WES.AU)$ , $GPT GROUP(GPT.AU)$ , $MIRVAC GROUP(MGR.AU)$ , $TELSTRA GROUP LTD(TLS.AU)$ , $APA GROUP(APA.AU)$ , $VICINITY CENTRES(VCX.AU)$ , $STOCKLAND(SGP.AU)$ , $BRAMBLES LTD(BXB.AU)$ , $ORIGIN ENERGY LTD(ORG.AU)$ , $SANTOS LIMITED(STO.AU)$ , $WESTPAC BANKING CORPORATION(WBC.AU)$ , $SCENTRE GROUP(SCG.AU)$

Here are stocks at new highs(Data as of August 19th, 2025):$WESFARMERS LTD(WES.AU)$ , $HUB24 LTD(HUB.AU)$ , $QUBE HOLDINGS LTD(QUB.AU)$ , $SANDFIRE RESOURCES LTD(SFR.AU)$ , $Eagers Automotive Ltd(APE.AU)$ , $CODAN LTD(CDA.AU)$ , $IperionX Ltd(IPX.AU)$ , $IMDEX LTD(IMD.AU)$ , $MADER GROUP LTD(MAD.AU)$

2. Key Analysis

1. ASX Market Performance

• The $S&P/ASX 200(XJO.AU)$ surged to 8,963points on August 18, extending its 2025 rally amid expectations of further RBA rate cuts and resilient corporate earnings.

2. Leading Sectors & Indexes

• Since 2025, Gold Mining stocks have seen the best overall growth, followed by payment concept stocks, and then REITs.

• In terms of indices, the XGD-ASX All Ordinaries Gold Index has seen the highest growth since 2025, the XTX-All Technology Index has seen the second highest growth, and the XSO-ASX Small Ordinaries Index has seen the third highest growth.

3. Macro Drivers

The Reserve Bank of Australia (RBA)'s interest rate cut cycle, which began in 2025, has provided a dual impetus for the Australian stock market (ASX 200) through "valuation repair and earnings rebalancing."

Read more>>

RBA Cuts Rates for the Third Time This Year, Kicking Off a New Easing Cycle @Invesight_Capital

The core transmission path and the latest market feedback can be summarized in five key points:

Interest Rate Path and Market Expectations

• As of August 12, the RBA had cut interest rates three times this year, totaling 75 basis points, bringing the cash rate to 3.60%, a two-year low.

• The interest rate swap market has fully priced in at least another 25 basis point cut in 2025 (with an approximately 80% probability of November), with the expected end point rate around 3.1%.

The Immediate Effect of the Rate Cut on the ASX 200 Index

• On August 12, the day of the rate cut, the $S&P/ASX 200(XJO.AU)$ rose 0.4%, reaching a new all-time high of 8,880.8 points; financial and retail sectors led the gains.

• Since the first interest rate cut in February, the index has risen by over 13%, with valuations expanding from 16x forward P/E at the beginning of the year to 19x, reflecting a "liquidity premium" rather than improved earnings.

Sector Transmission Logic

• Financials: Although banks' net interest margins are under pressure, the interest rate cut reduces the risk of non-performing loans and boosts credit demand. The four major banks ( $COMMONWEALTH BANK OF AUSTRALIA(CBA.AU)$ , $ANZ GROUP HOLDINGS LTD(ANZ.AU)$ , $NATIONAL AUSTRALIA BANK LTD(NAB.AU)$ and $WESTPAC BANKING CORPORATION(WBC.AU)$ ) all strengthened on the day of the rate cut, with ANZ rising 2.2%.

• Real Estate & REITs: Lower financing costs have increased the attractiveness of rental yields, and the S&P/ASX 200 A-REIT Index has outperformed the broader market by approximately 6 percentage points this year.

• Retail & Consumer Goods: Lower monthly mortgage payments have led to a "disposable income effect," benefiting retail stocks such as $JB HI-FI LTD(JBH.AU)$ and $BREVILLE GROUP LTD(BRG.AU)$ .

• Technology: High-duration assets are most sensitive to discount rates. The S&P/ASX All Tech Index has rebounded over 20% from its April low, partially offsetting the pullback in resource stocks.

Exchange Rates and Capital Flows

• The Australian dollar plunged briefly after the rate cut, then rebounded due to the Fed's simultaneous dovish stance, remaining generally within a weak range.

• The weak Australian dollar provided a hedge against export-oriented resource giants ( $BHP GROUP LTD(BHP.AU)$ , $Rio Tinto Ltd(RIO.AU)$ , and $FORTESCUE LTD(FMG.AU)$ ), supporting the index even as resource prices retreated.

3. Risks & Considerations

• Valuation Stretch: As of August 19, 2025, the S&P/ASX 200 Index's forward price-to-earnings ratio (P/E) stood at 19 times, significantly above its long-term average of 14.8 times and at a historically high level, posing a risk of "valuation stretch."

  $Morgan Stanley(MS)$ noted that this valuation level has deviated from fundamentals. While the market consensus projects a second consecutive year of decline in corporate earnings in fiscal 2025 (earnings per share growth of -1.7%), the index has rebounded 18.3% since its April low, pushing the forward P/E ratio to 19 times, two standard deviations above its long-term average.

  Furthermore, $BlackRock(BLK)$ data shows that as of August 15, 2025, the iShares Core S&P/ASX 200 ETF (IOZ) had a static P/E ratio of 22.45 times, further confirming the overall market's stretched valuations.

• The pace of future RBA rate cuts will be highly dependent on third-quarter CPI, employment, and retail sales data. If inflation becomes more sticky than expected, a terminal rate above 3.1% would trigger a valuation correction.

• Global trade policy (US tariffs on China) and oil price fluctuations remain external risks, potentially offsetting the valuation expansion from rate cuts through earnings expectations.

• Sector Volatility: Energy and Materials face risks from commodity price swings, while Tech remains vulnerable to rate shifts 12.

4.Final Thought

The ASX’s record run reflects a "goldilocks" mix of dovish policy and cyclical recovery, but investors should prioritize stocks with strong earnings momentum (e.g., ORG, XRO) and diversify across winning sectors.

WEEK 4 (18 th August – 22 nd August) Earning of ASX stocks.

Earnings Calenda

Earnings Calenda

Disclaimer: This material is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Past performance is not indicative of future results. All investments carry risk, including the possible loss of principal. You should conduct your own research and consult a licensed financial adviser before making any investment decision.