New eToro data reveals ASX back in Aussie investors’ crosshairs amidst global volatility:
- 42 per cent of Aussie retail investors back the AU market for long-term returns, up from 30 per cent in Q4 2024
- Confidence in the US stock market continues its slide, falling from 40 per cent in Q4 2024 to just 30 per cent
- 37 per cent of Aussies now see the global economy as the biggest threat to their portfolios, the highest since Q2 2022
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Confidence in home grown shares
Confidence in Australia’s financial markets is on the rise among local retail investors, with new data from trading and investing platform eToro’s latest Retail Investor Beat (RIB) revealing a growing shift toward homegrown investments. In a survey of 10,000 retail investors across 12 countries – including 1,000 from Australia – 42 per cent of Aussies believe the ASX will deliver the strongest returns in the long term out of all regional stock markets, up from 30 per cent in Q4 2024. Meanwhile, sentiment toward US equities has dropped sharply, with support sliding from 40 per cent to 30 per cent in the same period.
Local retail investors don’t just prefer Aussie stocks as a long-term investment, they are currently most likely to increase their allocation to domestic equities (19 per cent), compared to only 7 per cent for foreign equities. The downturn in enthusiasm for US markets reflects broader economic uncertainty, with 37 per cent of Aussie investors citing the global economy as the biggest threat to their investments – the highest figure recorded since Q2 2022. Inflation follows as the second biggest concern at 17 per cent.
Younger investors see some of the risks differently.
Gen Z respondents were equally split between concerns about inflation and global conditions (23 per cent each) and were more likely than any other age group to worry about interest rates (17 per cent). By contrast, nearly half of all Baby Boomers (46 per cent) pointed to the global economy as their number one worry, while only 9 per cent chose inflation.
Commenting on the data, eToro Market Analyst Josh Gilbert, says: “This renewed confidence in the ASX has coincided with the re-election of the Albanese government, reflecting Aussie retail investors’ confidence in economic stability and policy continuity. The government’s focus on fostering a stable investment environment appears to be resonating with local investors.
“The shift also reflects growing concerns around global uncertainty and the underperformance of US equities this year. Trade tensions and political uncertainty abroad are pushing Aussie investors to look local for more predictable returns.“However, there’s a clear generational divide in what investors are prioritising. Gen Z’s focus on inflation and interest rates likely reflects cost-of-living pressures and longer-term goals like housing affordability. Boomers, with more capital at stake, are watching geopolitical and economic trends more closely but are less bothered by inflationary pressures.”
Investors hedge against weaker USD with gold
As fears mount over a weaker US dollar and persistent inflation, Aussie retail investors are repositioning their portfolios, with nearly half (46 per cent) of respondents having adjusted allocations or planning to. The most common ways in which investors are doing this include:
“60 per cent of respondents said they expect gold prices to increase in the next 6–12 months, which reinforces its traditional role as an inflation hedge. Interestingly, we’ve seen Bitcoin’s growing status among younger investors as a similar hedge. Out of local retail investors who are adjusting their portfolios based on a weaker USD, 27% of Gen Z respondents said they will buy more crypto, the highest out of all generations. Indeed, 52 per cent of local Gen Z investors already hold crypto,” said Josh Gilbert.
Volatility leaves Aussies alert – but not alarmed
While 35 per cent of local investors say market volatility makes them feel vigilant, 28 per cent report feeling anxious. 24 per cent say it makes them feel hopeful or excited, indicating an optimistic streak in the face of market swings. This optimism extends to investing strategies, with over a quarter (26 per cent) of Aussie retail investors seeing a decline of 10 per cent or less as an opportunity to buy the dip.
“While market volatility has retail investors on alert, not all of them are alarmed. Many see recent market dips as buying opportunities, which signals a level of confidence in long-term market resilience.“The risk of being out of the market altogether is something savvy investors are acutely aware of. The recent rebound in global equities since April has reinforced that view, even in uncertain times. For Aussie investors, this means balancing risk by adding exposure to gold, while leaning into sectors and markets they understand best, and for now, that’s their own backyard,” commented Josh Gilbert.
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