H1 2026 Investment Outlook

Our expectation is that global growth holds up in 2026 as inflation in developed markets continues to moderate, with further Fed cuts, a weaker USD against the trade-weighted index and the AUD, and Australian price pressures easing over the year. This backdrop should be supportive for risk assets, with a preference for ex-US developed and emerging markets, where USD weakness may weigh on US equity returns in AUD terms. Within the US, the earnings power of the Nasdaq 100 continues to stand out, showing increasing breadth beyond the Mag 7 and greater insulation from a softer USD.

We are more positive on Australian equities than we have been for a number of years, supported by a constructive outlook for commodities, improving earnings momentum and an attractive entry point in Australian tech following the recent sell-off. For defensive allocations, sovereign bonds now offer a reasonable yield pick-up over cash, Australian government and corporate bonds present the most compelling risk-adjusted opportunities in investment-grade fixed income, and gold remains favoured in US dollar terms as its role in multi-asset portfolios continues to grow.