Week in review

• Australia CPI inflation October 3.8% y/y
• RBNZ cuts rates 25bps to 2.25%
• U.S. retail sales 4.3% y/y

Week ahead

• Eurozone CPI inflation
• Australia house prices
• Australia 3Q real GDP

Thought of the week

Recent weeks have seen many questions about the ongoing strength of U.S. mega-cap tech stocks. While it can be challenging to separate rational optimism from market exuberance, fundamentals remain supportive. Valuations for the "Magnificent Seven" have risen, so investors should stay alert to potential shocks, but current levels are far from those seen during the dot-com bust. Notably, over half of mega-cap returns in the past three years have come from earnings growth and those earnings have consistently beaten market expectations. Planned investments are significant and somewhat circular and the increased use of debt means leverage will face more scrutiny. Still, the average net debt-to-EBITDA ratio for the hyperscalers is below average for investment-grade companies, suggesting financial discipline remains intact for now.

60% of the mag 7’s returns have been driven by earnings

Total return since Chat GPT release 30 Nov 2022

Source: FactSet, Standard & Poors J.P. Morgan Asset Management. Data reflect most recently available as of 28/11/25.

All returns in local currency unless otherwise stated.

Equity price levels and returns: Levels are prices and returns represent total returns for stated period.

Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.

Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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