The Iran war ends, but the energy shock lingers

The 2026 Iran war, triggered by a joint US-Israeli strike on Iranian leadership in late February, produced the largest disruption to global oil supply in recorded history. Iran’s closure of the Strait of Hormuz, through which roughly 20 per cent of the world’s oil and LNG passes, sent Brent crude surging in the largest year-to-date oil price move in over 40 years. The conflict drove immediate market volatility, a global bond sell-off, and expectations of both higher inflation and delayed rate cuts across virtually every major economy.

The war is over. The Islamabad Memorandum was signed in mid-June, with Trump signing at Versailles following the G7 summit and Iran’s president signing in Tehran. The dual blockade has been lifted and shipping is resuming. Markets rallied sharply on every positive development, and sold off just as sharply when truces wobbled. The S&P 500 posted a 4.5 per cent gain in one week; the Nasdaq had its thirteenth consecutive winning session. Then anxious reversals followed. A reminder that reacting to every headline is generally the wrong instinct.

SpaceX lists on Nasdaq: the largest IPO in history

SpaceX listed on the Nasdaq on 12 June 2026 under the ticker SPCX, pricing at US$135 per share and raising approximately US$75 billion, the largest IPO in stock market history by a significant margin. The company debuted at around US$1.8 trillion in valuation, briefly crossing US$2 trillion before pulling back. As of 22 June it was trading near US$165: still 22 per cent above the IPO price, but 27 per cent below its intraday peak of US$225.64.

SpaceX is a genuinely remarkable business. Starlink accounts for roughly 58 per cent of revenue. Its launch services are the commercial standard. The company also completed the acquisition of Elon Musk’s xAI business in February, adding artificial intelligence as a third major segment. The pull-back from the peak partly reflects that the AI division burned US$7.7 billion in the March quarter and posted a US$2.47 billion operating loss, and partly the valuation multiples required to own a name like this on the open market.

US tariffs and what they mean for Australia

The “Liberation Day” tariff package introduced in April 2025 has been reshaping global trade flows throughout this financial year. Australia emerged with some of the lowest direct exposure of any major economy: a blanket 10 per cent on goods exports to the US, which account for roughly 4 per cent of total Australian exports and under 1 per cent of GDP. The direct impact is modest. The indirect impact is more important.

China, which takes around 45 per cent of Australia’s resource exports, faces far steeper US tariffs. A slowing Chinese industrial sector puts downward pressure on demand for Australian iron ore, LNG, and metallurgical coal. Iron ore prices have been more resilient than expected, partly because Chinese fiscal stimulus has supported steel demand, but the structural picture over the next decade is one of declining Chinese iron ore dependence. CBA economists have noted that Australia’s export dependence on China has already halved since 2018.

For investors with heavy concentration in Australian resource names, that is a relevant medium-term consideration. Diversification across sectors, geographies, and asset classes is not just a portfolio theory observation right now. It is a practical one.

A year of sharp moves, in both directions

The 2025 to 26 financial year was not a smooth ride. It started with reasonable momentum, hit serious turbulence in February and March when the Iran conflict disrupted global oil supply and inflation expectations moved sharply upward, then recovered strongly through the second half as ceasefire negotiations progressed and corporate earnings held up better than most had expected. Anyone who checked their super balance in April and felt uneasy would, in most cases, be looking at a much better picture by June.

How the major asset classes performed

International shares were the standout for the year. AI-related optimism, strong US corporate earnings, and the recovery in sentiment following the ceasefire all contributed. Markets with heavier technology exposure, particularly in the US and South Korea, delivered strong returns. Australian shares also finished the year ahead, though they trailed global indices. The ASX does not carry the same weight in technology and AI infrastructure that powered overseas markets, and while banks and resources both had their moments, energy stocks were volatile, surging on the Iran supply shock before pulling back as shipping normalised.

Defensive assets had a reasonable year on balance. Cash returned around 4 per cent. Australian and international bonds contributed positively overall, though bond markets moved around during the Iran conflict as inflation fears pushed yields higher before settling back. Australian listed property (REITs) was the one asset class that finished in negative territory for the year. Unlisted assets including infrastructure and private equity held up well, with final numbers for those categories typically confirmed after year end.

How risk profiles translate to outcomes

Super funds in Australia are broadly categorised by how much of the portfolio is held in growth assets (shares, property, private equity) versus defensive assets (cash, bonds). A growth fund is typically weighted more heavily toward shares and similar assets, with a smaller allocation to cash and bonds. A balanced fund sits somewhere in the middle. A conservative fund holds proportionally more in defensive assets. Each category is built around a different trade-off between return potential and volatility, and each will produce meaningfully different outcomes in any given year depending on which parts of the market led.

In a year like this one, where international shares performed strongly, a growth fund with higher exposure to those markets would generally have done better than a conservative fund holding more cash and bonds. Within growth funds, a portfolio weighted more toward international equities would typically have outperformed one weighted more toward Australian shares. The currency added another variable: international share returns look different depending on whether the fund hedges the Australian dollar exposure or leaves it unhedged.

None of that means one approach is better than another in any absolute sense. The right portfolio for a client approaching retirement, drawing an income stream, or with a lower tolerance for volatility looks different from the right portfolio for someone with a 20-year horizon and the capacity to ride out sharp moves. Your annual statement should be read in that context.

What changes from 1 July 2026

The concessional contributions cap rises from $30,000 to $32,500. Division 296 (the additional 15 per cent tax on earnings attributable to super balances above $3 million) commences, applying to realised earnings only. And Payday Super begins: from 1 July, employer SG contributions must be paid within 7 business days of each payday, not quarterly. If you run a business with employees and your payroll systems are not ready, that needs attention now.

The CGT and negative gearing reforms are now legislation

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed both houses of Parliament on 25 June 2026. The Albanese government secured passage with Greens support after the Greens blocked the Coalition’s attempt to delay the vote. After the Senate passed the bill with amendments, the House of Representatives agreed to the amended form the same afternoon, 98 votes to 39. This is no longer a proposal. The changes are law.

The legislation moved quickly by any measure: introduced on 28 May 2026 and passed in under a month. It is the most far-reaching overhaul of Australia’s CGT regime since the discount itself was introduced in 1999. It also, for the first time in 40 years, brings pre-CGT assets (those acquired before 20 September 1985) into the capital gains tax regime.

What the Greens secured, and why it matters

In exchange for their Senate votes, the Greens secured two meaningful amendments. First, limited recourse borrowing arrangements (LRBAs) for residential property inside an SMSF are now banned. This removes the primary mechanism that SMSF investors have used to leverage into real estate. If you hold residential property through your SMSF using an LRBA, the implications for your fund structure need to be reviewed.

Second, the Greens stripped out provisions that would have allowed a future minister to wind back the CGT and negative gearing reforms through regulation rather than legislation. Those protections now require an act of Parliament to undo.

What is still to come

The 30 per cent minimum tax on discretionary trust distributions (announced in the Budget for commencement 1 July 2028) has not yet been introduced to Parliament. A second tranche of legislation will also address several loose ends in the current Bill, including a grandfathering problem for jointly owned properties where one co-owner dies or the couple divorces (a provision Senator David Pocock flagged before the vote, and which the government confirmed would be fixed). The precise definition of “new residential dwelling” and consultation on an Innovative Business CGT Concession for start-ups also remain outstanding.

Premiums keep rising. The reasons are structural.

If your home, contents, or health insurance renewal looked excessive this year, you are not imagining it. In 2025, Australian insurers recorded natural hazard losses of $4.46 billion, seven times the 2024 figure. Ex-Tropical Cyclone Alfred and the Queensland and NSW severe storms drove over $3 billion in losses alone. Reinsurance costs have risen globally as international reinsurers reprice catastrophe exposure, and construction cost inflation continues to push up the cost of settling property claims.

Three practical considerations

Sum insured. If you have not reviewed your home sum insured in the past two years, it is almost certainly not keeping pace with replacement cost increases. Underinsurance is a real and growing risk.

Retirement cashflow. Rising premiums need to be factored into retirement income projections. They are not a static cost.

Life and income protection inside super. Reinsurers are repricing personal risk too. If you have not reviewed your insurance cover recently, add it to the agenda at your next meeting.

Self-funded or on the Age Pension: why the question is usually the wrong one

Retirement in Australia tends to get framed as a binary: either you are comfortably self-funded, or you are reliant on the Age Pension. That framing misses where the majority of retirees actually sit, and it generates a fair amount of unnecessary anxiety in the process.

Most Australians retire somewhere in the middle, drawing on a combination of personal savings and some level of Age Pension (full or partial) at different points during retirement. That is not a failure of planning. It is how the system was designed to work. The three pillars (superannuation, private savings, and the Age Pension) are intended to complement each other.

Someone who retires at 65 fully self-funded might find themselves eligible for a part pension by 75, and more reliant on it in their 80s and 90s. That progression is normal. Receiving the Age Pension does not mean you are financially struggling. Combining a part pension with private savings can be one of the more stable and tax-efficient ways to fund retirement.

Downsizing looks like a financial win. Until it hits your pension.

For many retirees, the family home is the largest asset on the balance sheet. Downsizing can seem like a straightforward financial improvement: free up equity, reduce maintenance, simplify life. In many cases it is the right call. But for Age Pension recipients, the move can come with a significant and largely unexpected cost. The family home is exempt from Centrelink’s assets test, regardless of its value. Once you sell and downsize, any cash not reinvested in a new property becomes an assessable asset.

The downsizer contribution rules allow eligible Australians aged 55 and over to contribute up to $300,000 from the sale of their family home into super, which can shift the asset to a more sheltered form. The Home Equity Access Scheme allows borrowing against home equity at a government rate without triggering a loss of assets test exemption. Neither is automatically the right answer. A decision of this magnitude should involve us before the sale contract is signed, not after.