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Australia’s benchmark share index closed lower Friday, reversing gains from earlier in the week as a fresh round of U.S. tariff threats and a sharp selloff on Wall Street weighed on sentiment, capping a third consecutive weekly decline for the local market.

A rough end to the trading week

The S&P/ASX 200 fell 66.70 points, or 0.75%, to close at 8,772.30 on Friday, giving back a string of gains posted earlier in the week. Weakness was broad-based, spreading across the technology, consumer durables, non-energy minerals and healthcare sectors. Technology names led the losses, with Xero falling 4.5%, WiseTech Global dropping 4.6%, and Megaport sliding 3.3%. Gold miners also retreated, with Northern Star Resources down 3.9% and Evolution Mining off 2.4%. Australia’s four major banks were a rare bright spot, rising between 1% and 1.5% as investors rotated toward more defensive, income-generating stocks.

For the week overall, the index shed roughly 0.3%, marking its third consecutive weekly decline even as trading earlier in the week had briefly pushed the market toward stronger gains.

Trump’s tariff announcement rattles sentiment

The pullback came after the Trump administration said it would impose new tariffs on 60 trading partners, a move that unsettled global markets and flowed through to Australian trading given the country’s close economic and trade ties with both the United States and Asia-Pacific export markets. The announcement contributed to a sharp overnight selloff on Wall Street, which set a negative tone for Friday’s session in Sydney. The Dow Jones Industrial Average fell 0.97% overnight, while the tech-heavy Nasdaq Composite dropped a steeper 2.15%, dragging down sentiment across Asia-Pacific markets the following morning.

Strong jobs data complicates the rate outlook

Domestically, robust employment figures added another layer of complexity to the week’s trading. Australia added 76,000 jobs in June, far exceeding consensus expectations of around 15,000, while the unemployment rate held steady at 4.4%. The stronger-than-expected labor market data initially helped push the index higher earlier in the week, with the ASX 200 climbing as much as 1.1% intraday on Thursday to touch 8,926.30, its best level since mid-June, before those gains were pared back as investors recalibrated expectations for Reserve Bank of Australia policy.

The strong jobs report lifted the odds of an August RBA rate increase to roughly 36%, with markets now largely pricing in a move to 4.6% by the end of the year following three rate hikes already delivered in 2026. That shift added pressure to rate-sensitive sectors, including parts of the financial sector, even as the broader market weighed the implications of a still-resilient labor market against the risk of further tightening.

With Australia’s inflation data for June and the second quarter due out the following week, investors remained cautious about the potential for persistent price pressures to further complicate the central bank’s policy path heading into the back half of the year.

Commodities offer a partial offset

Mining and materials stocks provided some support during the week, helped by strength in key commodity prices. Gold traded around $4,116 an ounce, while iron ore futures climbed 1.7% to $98.70 in Singapore, lifting major miners including BHP Group, which rose 1.5% to $60.63, Fortescue, up 1% to $18.76, and Northern Star Resources, up 2% to $20.74 during Thursday’s session before the sector cooled into Friday’s close.

Energy stocks also found support mid-week after oil prices rose 2.3% to $96.24 a barrel, following reports that Iran-backed Houthi militants had attacked two Saudi Arabian oil tankers in the Red Sea, adding a geopolitical risk premium to crude markets that flowed through to Australian energy shares.

A market still near record territory despite the pullback

Even with the week’s decline, the ASX 200 remains within striking distance of the record highs it set earlier this year. The index touched an all-time intraday high of 9,198.6 points in February before pulling back toward the high-8,000s range by mid-year. Over its more than 25-year history, the benchmark index has delivered a long-term annualized total return of roughly 8.2%, including dividends, making short-term pullbacks like the one seen this week a routine part of its longer-term trajectory rather than a departure from it.

Seasonally, July has historically been one of the stronger months for the ASX 200, with the index averaging a gain of roughly 2.13% for the month since 1980 and finishing higher in 72% of those years. Recent Julys in particular have performed well, with the index closing higher in 11 of the last 12 years during the month, making this year’s choppier trading somewhat of an outlier relative to the seasonal pattern.

What investors are watching next

With inflation data for June and the second quarter due the following week, market participants are likely to remain focused on how that report shapes expectations for the Reserve Bank of Australia’s next policy move. The interplay between a resilient labor market, persistent inflation risk, and the fallout from the latest round of U.S. tariff actions is expected to remain the dominant theme driving Australian equity markets in the near term, alongside ongoing volatility in global commodity prices and continued swings in U.S. technology shares, which have had an outsized influence on sentiment in Sydney trading throughout the year.

Q) Thanks for taking the time out. Please take us through the performance of the fund from short- & long-term perspective.

A) The investment approach has continued to demonstrate balanced performance despite a volatile market environment.

Alchemy Long Term Ventures Fund has delivered an absolute return of 17.0% in CY2026 year-to-date basis and a CAGR of 22.6% since its inception on 1 September 2023, reflecting the fund’s investment philosophy to identify the businesses with strong earnings momentum, robust balance sheets, and favourable sectoral tailwinds.

Alchemy Long Term Ventures Fund, Series 2 has also delivered a CAGR of 14.8% since its launch on 1 September 2025, reinforcing the consistency of our investment approach across market cycles.

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Data as on 30 June 2026.
(Returns are net of Post Fees, Expenses and Taxes. Consolidated Returns are calculated using unitization method. The Consolidated Returns may vary with investors’ returns depending on the class/series investor have subscribed into. |Past performance is not indicative of the future performance. Returns less than 1 Year: Absolute, greater than 1 Year: CAGR| Performance related information provided herein is not verified by SEBI.)
Q) The fund primarily focuses on small-cap opportunities while retaining the flexibility to invest up to 35% in unlisted securities. How do you balance the higher growth potential of these segments with liquidity and valuation risks?
A) Alchemy Long Term Ventures Fund, Series 3 (Category III AIF) is designed for sophisticated investors who have a long-term outlook and understand the risks associated with such a strategy.

Clearly, this is for investors that have an appetite for risk but are looking for differentiated exposure beyond traditional listed equity strategies. The unlisted sleeve is to take advantage of dynamism and entrepreneurial energy of entrepreneurs building the next generation of high growth businesses in strategic growth sectors.

We aim to blend that with similar companies operating in these sectors in the listed space. The ability to straddle both listed and private opportunities gives us significant flexibility to deploy capital. Restricting unlisted to up to 35% of the fund, allows us to strike a balance between liquidity and tenure of investments which is between 4-5 years.

We are reasonably sensitive about entry valuations. On the listed side we use market volatility to our advantage as we always have liquidity on tap.

Q) The strategy identifies themes such as data centres & AI, defence, green mobility, semiconductors, manufacturing and green energy as key opportunities. Which of these themes do you believe could create the most wealth over the next 4-5 years, and why?
A) All the above sectors have tremendous potential, in my view. Our idea is to identify companies and founders in the value chain that exhibit both – great growth opportunity combined with attractive business economics, in terms of profitability and economic returns.

One without the other does not cut it with the objectives of the strategy. It is our firm belief that some of the most innovative high growth companies may be built by the next generation of entrepreneurs who are unconstrained by previous profit pools and are likely to embrace advanced technologies and practices faster than incumbents.

The opportunity set for these companies arises from building certain foundational capabilities in defence, aerospace, space, semiconductors, healthcare, biotech, AI, data centre infrastructure, green energy and green mobility to name a few.

Q) The existing Alchemy Long Term Ventures Fund has delivered a 22.6% post-tax CAGR since inception, with significant exposure to industrials and IT. What have been the key drivers of this performance, and can the same investment framework be replicated in Alchemy Long Term Ventures Fund, Series 3?
A) Our exposure in Alchemy Long Term Ventures Fund has been towards manufacturing and industrial companies spanning several strategic sectors. In IT, our exposure has not been to traditional services companies but in companies that leverage specialised skill sets in silicon design, space communication, devices and transportation sectors.

We have also seen encouraging progress from our investments in healthcare companies bringing original research molecules to commercial stage. Yes, we intend to carry the same investment philosophy in Alchemy Long Term Ventures Fund, Series 3 as well.

The portfolio performance was supported by a combination of earnings growth and valuation re-rating of our portfolio companies.

Q) The strategy can invest across listed equities, IPO anchor books, pre-IPO opportunities, and unlisted securities. In the current market environment, where are you finding the most attractive risk-reward opportunities?
A) Market volatility always gives us many attractive entry points. March 2026 was one such occasion. In anchor books and unlisted we are extremely selective in our approach. We continue to see a healthy interest from IPO-bound companies to be part of their cap table, a trend we attribute to our long-standing presence and historical track record.

In unlisted, the quality of the founders and entry valuations matter the most, so we are always on a lookout for that.

Q) Given the minimum investment of Rs 1 crore and the fund’s four-year tenure, what role should a Category III AIF such as this play in an HNI investor’s overall portfolio?
A) Alchemy Long Term Ventures Fund, Series 3 is a high-risk strategy, and investors should consider such investments in the context of their investment objectives, liquidity needs and risk tolerance. Investors may consider making investments of such sums with a horizon of over the next 5-10 years. This would generally sit between small/midcap equity and private equity.

Q) India’s data centre capacity per 1,000 internet users remains significantly below China and the US, according to the fact sheet. Where do you see the biggest investment opportunities emerging as India builds its AI and data centre infrastructure?
A) I think the initial opportunities are at an infrastructure layer and its entire ecosystem – from designing, building to equipment that go into a data centre.

However, we are now seeing many interesting opportunities even on the application layer, where companies are using AI models and capabilities to deliver services to enterprise customers and consumers. We have made select investments in companies leveraging AI at the application layer.

Disclaimer: Past performance is not indicative of the future performance. The sectors herein are solely for information purposes and may or may not form part of the Fund’s portfolio at the time of making investments.

Alchemy Long Term Ventures Fund, Series 3 is one of the schemes of Alchemy Alternative Investment Trust, registered with Securities and Exchange Board of India (SEBI) as a Category III – Alternative Investment Fund, vide registration number IN/AIF3/17-18/0381. Alchemy Capital Management is registered with the Securities and Exchange Board of India (SEBI) as a Portfolio Manager and appointed as the Investment Manager of the Trust and the Fund.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)