NEWS + VIEWS – 16/01/2026
MARKETS
Share markets in the US have been held back this week by underwhelming earnings results from some major banks and a rotation away from expensive tech stocks. Geopolitical tensions in Iran helped lift energy stocks and safe-haven assets. After the Federal Reserve deployed three interest rate cuts since September, money markets expect that the Fed may keep rates steady this month.
Domestically, the ASX 200 has been relatively resilient as gains in the energy and materials sectors offset weakness in the financials and technology sectors. Investors are watching closely for upcoming economic data and Reserve Bank (RBA) policy signals that could influence risk appetite going into the new year.
OUTLOOK FOR 2026
Global share markets
Most major financial institutions see continued modest gains for global equities in 2026, supported by economic growth, ongoing corporate earnings expansion and a gradual move toward more accommodative monetary policy after years of tightening. US equities in particular are expected to outperform global peers, with some forecasts projecting further gains in the S&P 500 to be driven by the tech and AI-related sectors, and potential rate cuts during the year.
Consensus forecasts suggest mid-single-digit to low-double-digit returns for global stock markets, though valuations remain elevated and market volatility is likely as central banks balance inflation risks with growth, and geopolitical tensions (e.g. US - China competition) continue to influence sentiment. Analysts expect the S&P 500 to rise around 10% on average in 2026, with some bullish forecasts from Goldman Sachs (11%) and Deutsche Bank (16%).
Australian share market
In Australia, analysts generally expect the share market to deliver positive but more modest returns. Last month, UBS had predicted that the ASX 200 would reach around 8,900 by the end of 2026, driven by resource sector strength, supported by long-term demand for copper, lithium and energy-transition metals. However, the ASX 200 is already close to this mark. The iron ore outlook is more uncertain but still central to ASX performance.
Other analysts suggest that the ASX 200 could reach around 9,300 to 9,500 by late 2026, underpinned by an earnings recovery and attractive dividend yields, though elevated global risks could cap further upside. Drivers such as commodity prices, RBA interest rate settings and economic growth around 2-2.5% will be key influences on local equities. Some forecasts anticipate a sideways or range-bound trading year for the ASX, with sectors such as resources and defensive stocks performing relatively well.
Oil, gas and LNG stocks are expected to remain well supported by global demand and geopolitical risks. Defensive sectors (healthcare and infrastructure) should be attractive to investors if interest rates trend lower. Banks are expected to deliver solid dividends but modest capital growth. Earnings are sensitive to mortgage competition, credit growth and rate movements. Smaller ASX-listed tech stocks may struggle compared with US peers.
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