Equities advanced in Australia and the U.S. last week, with both local and global indexes up. We delve into Rio Tinto (ASX: RIO), GemLife Communities Group (ASX: GLF), Intercontinental Exchange (NYSE: ICE) and Somerset Specialist Centre below, as investors balance tomorrow’s widely expected RBA rate cut, resilient U.S. corporate cash flows and Wednesday’s expiry of Trump’s 90-day tariff pause.
Market Updates
The S&P/ASX 200 Accumulation Index rose 1.1% over the week to a record high, supported by gains in healthcare, real estate and materials, up 3.3%, 3.0% and 2.9% respectively. These sector gains offset weakness in financials that fell by 0.7%, driven by Commonwealth Bank (ASX: CBA) shares, which dropped 4.0% as investors rotated out of the bank and into less inflated sectors. Iron ore producers rallied after China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) climbed to 50.4 in June, signalling a stronger near-term outlook for steel production. The S&P/ASX Small Ordinaries Accumulation Index also finished 0.9% higher.
It was a holiday-shortened week in the U.S., with the S&P 500 (U.S. large caps) and the S&P Small Cap 600 (U.S. small caps) rising 1.8% and 3.2% respectively. Despite modest declines in Europe and Asia, the MSCI World Index (AUD) also gained 1.1%. Markets focused on the passage of President Trump’s Big Beautiful Bill, which he signed into law after the bill narrowly passed the Senate and the House of Representatives last week. The U.S. Department of Labor reported that the economy added 147,000 jobs in June, ahead of consensus expectations. On Friday, Trump reiterated that tariff notices are imminent, with levies of up to 70% to start in August.
Key watchpoints for the week ahead include the RBA meeting tomorrow, 8 July, with markets forecasting a more than 90% probability of another 25 basis-point cut which would take the cash rate to 3.6%, and the scheduled end of Trump’s 90-day tariff pause on Wednesday, 9 July.
Stock Watch
Rio Tinto
China’s stronger-than-expected manufacturing PMI data lifted iron-ore prices last week, driving gains in the mining sector. Rio Tinto, the world’s second-largest iron-ore exporter, remains our preferred exposure due to its operational strength and robust price realisation. The company recently received all necessary State and Federal Government approvals to proceed with the US$1.8bn Hope Downs 2 replacement project which we see as an incremental positive as it de-risks the company’s medium-term supply outlook and underpins its strong cash-flow.
Held in: WAM Leaders (ASX: WLE), WAM Income Maximiser (ASX: WMX) and Wilson Asset Management Leaders Fund
GemLife Communities Group
GemLife Communities Group is a founder-led developer, builder, owner and operator of resort-style land-lease communities for Australians aged 50-plus. We participated in its 3 July IPO where it raised $750 million, valuing the company at around $1.6 billion. The proceeds will be used to fund the $270 million purchase of the Aliria land-bank, trim debt and accelerate a pipeline of 32 communities and almost 10,000 sites. GemLife Founder and CEO Adrian Puljich continues to hold a significant stake, reinforcing alignment with new investors. We are seeing more IPOs in the pipeline and are positive on the ability of these businesses to leverage the public equity market to accelerate their growth.
Held in: WAM Capital (ASX: WAM), WAM Leaders, WAM Active (ASX: WAA), Wilson Asset Management Leaders Fund and Wilson Asset Management Founders Fund
Intercontinental Exchange
Intercontinental Exchange operates global exchanges across equities, interest rates and energy end markets, and is a leading provider of mortgage technology for the U.S. mortgage market. ICE’s June 2025 monthly update showed continued underlying momentum with total average daily volume increasing 21% on June 2024, led by energy (+28%) and financials (+14%). Combined with broadly stronger pricing, the second quarter finished ahead of expectations. Intercontinental Exchange remains a beneficiary of geopolitical and macro uncertainty and is well positioned for continued earnings growth even in volatile markets.
Held in: WAM Global (ASX: WGB)
Somerset Specialist Centre (Barwon Investment Partners)
The Somerset Specialist Centre provides leading medical accommodation to specialists and allied healthcare practitioners, strategically located in The Quarter, a hub of healthcare, medical research and world-class education facilities in Western Sydney. The facility is occupied by a diverse range of providers across cancer care, medical imaging and radiology, with a weighted average lease expiry of six years. WAM Alternative Assets gains access to this institutional-quality healthcare real estate asset through our investment partner Barwon Investment Partners.
Held in: WAM Alternative Assets (ASX: WMA)
U.S. corporate cash flow remains strong
According to the Q1 U.S. Financial Accounts, corporates continue to benefit from a strong cash flow position. One preferred measure of free cash flow combines corporate internal funds with net equity issuance and subtracts capital expenditure. By design and since the 1980s, this measure is typically negative due to negative net equity issuance, or stock buy-backs. Even so, corporate free cash flow remains well above its long-term average.
This has several implications. First, despite current concerns around the U.S. labour market and capital expenditure arising from “Liberation Day” uncertainty, the starting point for corporates appears relatively strong. This financial resilience may help companies better absorb near-term turbulence. If economic activity exceeds currently subdued expectations, this could support the corporate earnings outlook. Secondly, credit spreads (the difference between corporate and government borrowing costs) typically move inversely with corporate cash flow. The current strength in cash flow aligns with the persistence of tight credit spreads from a cyclical perspective. When credit spreads are tight, it means investors are not demanding much extra return for taking on corporate credit risk.
Index returns performance table
Following momentum in the lucky country
Following on from WAM Leaders and WAM Income Maximiser Lead Portfolio Manager Matthew Haupt’s Op-Ed in the Australian Financial Review last week (read here), Portfolio Strategist Damien Boey has written a piece on the momentum trading in Australia for Livewire Markets. He shares why the very forces driving momentum higher could set up a painful reversal, and how prudent investors might respond. You can read Damien’s insights here.
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