Small beats big on ASX; PM accepts blame for massacre; Woodside boss to run BP

Small beats big on ASX; PM accepts blame for massacre; Woodside boss to run BP

News in brief

Prime Minister Anthony Albanese yesterday said he accepted responsibility for what happened at Bondi Beach last weekend, as prime minister of Australia, but he also called for the nation to be united in the aftermath of the massacre.

 

The CEO of oil giant Woodside Energy, Meg O’Neill, has resigned and will take the top job at global major BP.

 

Optus workers face the sack or financial penalties after an independent review exposed a litany of failures behind September’s deadly Triple Zero outage. The telco’s chairman called the findings “a sobering read for everyone at Optus.”

 

The Oscars will be exclusively streamed on YouTube from 2029, after the Academy of Motion Picture Arts and Sciences struck a deal with the platform, ending a near 50-year run on free-to-air ABC.

 

Researchers tracking wild polar bears in northern Canada have witnessed something exceedingly rare: a mother bear adopting a cub that was not biologically her own. The five-year-old mother bear and her 10- to 11-month-old cubs, including her adoptee, were observed and captured on camera during the annual polar bear migration along the Western Hudson Bay near Churchill, Manitoba, a town known for its polar bear population.

Fear-o-meter

The outperformance of small caps over large caps is partly about smaller mining stocks. Seventeen of the top 20 performing stocks over the past year were mining-related, and gold diggers make up more than half of those.

 

But there is more to it.

 

Car dealership Eagers Automotive, gaming group Tabcorp, powdered dairy products company A2 Milk, property group Charter Hall, and annuities and fund manager Challenger are all up 50 per cent or more in 2025.

 

There are some stock specific issues – DroneShield is up nearly 300 per cent this year on the back of wars involving drones - but broadly, smaller companies tend to do better in lower interest rate environments. That is because they are often cyclical stocks and also heavily indebted. 

 

Also, large caps ran so hard in the post COVID years before 2025, small caps became relatively cheap.

 

Helping the small cap outperformance is that some of the biggest stocks on the ASX have had a poor year. Commonwealth Bank, CSL, Macquarie Group, Goodman Group, Woodside Energy and Aristocrat Leisure are all top 20 stocks and have gone backwards over the past year.

Fear & Greed Q+A today

On the five lessons she learnt this year, including why politics matters more than ever to markets:

 

“Politics is causing an ever-increasing impact to share markets and to the economy… it really kickstarted with COVID. In the years prior, most Western economies were desperate for more fiscal stimulus… growth was too low… And then since COVID we’ve had this massive kick to government spending, consumption and investment… It’s not just government spending, it’s also intervention… As an economist, we need to actually forecast what the government’s going to do to give us a good idea about growth and inflation… I don’t remember spending this much time on things like the mid-year economic outlook… or focusing as much on the budget… It’s a sign that markets are so much closer to what’s happening in the government sector.”

With less than two weeks to go before the end of the year, small caps have outperformed their large counterparts in 2025, with gold companies leading the way. Of the major indices on the ASX, only the tech index went backwards, but the next worst performing was the ASX20 companies. Best of the major sub-indices was the ASX200 Resources index, which includes many smaller stocks. It is up 27 per cent in 2025. The ASX Small Ordinaries Index is up 18 per cent, whereas the ASX20 rose just two per cent. Overall, the ASX200 is up five per cent.

 

This is our last newsletter for 2025 - we'll be back in January. And from Monday, we start our Fear & Greed summer podcast series - these are shorter podcasts, with all-new episodes landing in your playlist twice a day. So even without the newsletter, there'll be plenty of Fear & Greed across the festive season.

Greed-o-meter

Year	Return %
2014	-57.5
2015	36.2
2016	120.3
2017	1400.0
2018	-73.8
2019	94.8
2020	305.1
2021	59.8
2022	-64.3
2023	157.0
2024	120.5
2025	-7.8

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Bitcoin is on track to deliver its fourth annual decline in its history. According to Bloomberg it's different to the other three negative results, as its the only one that doesn't coincide with a scandal or industry meltdown. In fact, it's happened even with a crypto-friendly President in the White House, and as tech stocks have boomed on Wall Street.

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Source: Bloomberg