Australian Equity Strategy: No rate relief till Nov-27. Staying underweight sectors exposed to domestic housing/consumer

Research evidence excerpt

Australian Equity Strategy: No rate relief till Nov-27. Staying underweight sectors exposed to domestic housing/consumer

Global Research

16 June 2026ab

Australian Equity Strategy Equity Strategy

AustralasiaNo rate relief till Nov-27. Staying underweight

sectors exposed to domestic housing/consumer Richard Schellbach

Strategist

richard.schellbach@ubs.com

+61-2-9324 2277

Some headfakes we don't buy Lily Huang

Over the past week, the market has breathed a sigh of relief that high oil prices are Associate Strategist

behind us and that domestic inflation risks are moderating. We are sceptical on both, lily.huang@ubs.com

+61-2-9324 2656

and see not only the prospect of prolonged oil price headwinds remaining, but a

domestic inflation picture that still dictates the need for higher rates from the RBA (our

economists expect +25bps in August with rates then on hold until November 2027).

Furthermore, the negative sentiment towards property looks set to remain for the

foreseeable future given the Government has shown no signs of backing down on its

taxation policy changes.

All sectors outside of Resources now seeing earnings downgrades

Outside of Resource equities, all the other sectors in Australia are now in earnings

downgrade mode. Given we expect downgrades to continue over coming months, the

ability of equity prices to 'look through' the cycle may be challenged. The stagflationary

signs coming from the domestic economy combined with the broad-based earnings

downgrades in equities are placing Australian equities in an uncompetitive position. We

expect the underperformance they have shown vs global markets over recent months to

continue.

History shows that rate cuts don't always save the day

Although we don't see the RBA cutting until the end of 2027, some others in the market