NEWS + VIEWS – 17/07/2026
MARKETS
Global share markets were driven by a mix of corporate earnings, technology sector volatility and geopolitical developments over the past week. Strong earnings from many US companies helped support investor confidence, but these gains were outweighed by a sharp sell-off in semiconductor and AI-related stocks. Softer US CPI data increased expectations for a less restrictive Federal Reserve policy, while renewed tensions in the Middle East kept investors focused on the risk of higher energy prices and inflation.
Domestically, rising oil prices supported Australian energy stocks, while weakness in the mining sector limited broader market gains. The ASX 200 was affected by fluctuations in iron ore prices and changing expectations for global growth, with investors remaining cautious about the outlook for interest rates and geopolitical risks.
COMPANY NEWS
Rio Tinto (RIO) reported its second quarter production results this week. Pilbara iron ore shipments increased 7% year-on-year to 85.3 million tonnes, which was above market expectations, while the company maintained its full-year shipment guidance of 323–338 million tonnes. Copper production declined -7% due to operational disruptions, but the miner lowered its 2026 copper cost guidance. The update was viewed positively by investors, ahead of RIO's half-year results on 29 July 2026.
BHP released its operational review for the year ended 30 June 2026 yesterday, which reported record iron ore production of 264.7 million tonnes, up 1% from the previous year, while copper production fell -3% to 1.95 million tonnes due to lower ore grades at the Escondida mine in Chile. The company met its production and cost guidance, and reaffirmed its strategic focus on expanding copper production to support long-term demand from electrification and renewable energy.
AUSTRALIA’S GROWTH OUTLOOK
In the June 2026 edition of its Business Outlook report released last week, Deloitte Access Economics has slashed its forecast for real economic growth in Australia for 2026-27 from 1.9% to 1.3%. The economy is now expected to limp along at less than 2.0% annual growth for the next two years – including growth of just 1.1% over the year to December 2026 – the longest stretch of sub-2% growth since the early 1990s recession.
Report author Stephen Smith said that Australia’s growth outlook has deteriorated over the past six months. The economy is still expanding, but growth has slowed and the outlook has become more fragile. Inflation has reaccelerated, interest rates have moved higher, and the oil price shock triggered by conflict in the Middle East is not yet fully resolved.
Smith also said that for too long, strong population growth has masked a weak underlying productivity performance and lifted aggregate growth while doing less to improve living standards. Years of insufficient investment in housing, infrastructure, energy and the economy’s productive capacity have left the supply side of the economy struggling to keep pace with demand.
The result is an economy more prone to inflation pressures at lower rates of growth. Meanwhile, the Middle East conflict has been another reminder that as a small open economy with a concentrated export base, Australia is highly sensitive to geopolitical disruption, shifts in global demand and commodity prices, and the security of trade routes.
The interaction of geopolitical exposure, weak productivity, stretched household balance sheets and a constrained supply side was easy to overlook when interest rates were low, commodity prices were high and population growth kept aggregate growth ticking along. They are harder to dismiss now that inflation is sticky, investment needs are rising and the global environment is more uncertain.
Deloitte’s forecasts suggest that headline CPI may remain above 4% for the remainder of the calendar year, with underlying inflation edging higher as the oil shock works through supply chains, peaking in early 2027 before returning to target in 2028. Interest rates will likely rise by 0.25% in August followed by a 12-month pause before normalising inflation allows the RBA to ease monetary policy late next year. The unemployment rate will average 4.9% in 2026-27 and may peak at 5% across 2027-28, before falling slightly as lower inflation and interest rate cuts stimulate the labour market.
Overall, Deloitte currently expects the Australian economy to grow by 2.2% in 2025-26, 1.3% in 2026-27 and 1.9% in 2027-28 – a decrease on prior forecasts of 2.4%, 1.9% and 2.0%, respectively.
Source: Deloitte Access Economics
The economy is unlikely to gain momentum until households and businesses are more confident to spend and invest. Consumer spending is weakening, while business investment remains subdued outside of data centre construction.
Business investment has strengthened over the past six months, but that strength is narrowly focused. The standout sector was information media and telecommunications, where capital expenditure almost doubled and equipment investment almost tripled.
That points to the rapid build-out of data centres to support cloud computing, AI and more data-intensive business models. The investment is real since it will add to Australia’s digital capacity and may support productivity over time. But the near-term effects are less powerful than the headline numbers imply, including because most of the equipment being installed is imported.
While Australia still has important strengths, including a resilient labour market and the productivity potential of AI, the near-term outlook is unusually downbeat. With risks firmly tilted to the downside, from global volatility to cost-of-living pressures at home, the key question for 2026 and beyond is the strength, breadth and durability of growth and what can be done to improve it.
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