Australia Macro+ Week Ahead: Financial Year Closed

Research evidence excerpt

Australia Macro+ Week Ahead: Financial Year Closed

Idea

July 5, 2026 08:00 PM GMT

Morgan Stanley Australia Limited+MAustralia Macro+ Week Ahead | Asia Pacific Chris Nicol

Equity Strategist

Financial Year Closed Chris.Nicol@morganstanley.comChris Read +61 3 9256-8909

Equity Strategist and Australia Economist

Chris.Read@morganstanley.com +61 2 9770-1513

FY26 closed with the ASX 200 up 6.1% TR, with Materials Antony Conte

outperforming Banks by 51%. Banking on a reversal in FY27 is EquityAntony.Conte@morganstanley.comStrategist +61 2 9770-1544

challenging given expected policy-driven headwinds for housing- Isabel Black

and consumer-linked earnings. Another year of Materials Isabel.Black@morganstanley.com +61 2 9775-2519

leadership would support our capex-over-consumption thesis.

What's Topical? FY26 Rear View Mirror: When expectations were set in August

2025, the outlook was for easier monetary policy, supportive fiscal settings and a

strengthening investment cycle. Instead, FY26 became a year of policy reversal.

Stronger growth, persistent inflation and an energy shock drove the RBA back into

tightening mode, while fiscal reforms reshaped incentives across property and Exhibit 1 : Macro catalysts for the week

capital markets. As a result, we believe Australia is now entering a necessary ahead

slowdown, with housing and consumer activity facing increasing pressure. The MondayRelease6 July Period MSe Consensus Prev.

upcoming reporting season will be critical in testing this view. Consensus earnings Tuesday 7 July

expectations remain elevated and heavily reliant on Materials in FY26e but also Wednesday 8 July

broaden out for FY27e. Our top-down models suggest earnings growth is likely to AU Speech by Sarah Hunter, Assistant Governor (Economics), RBA