Australia Macro+ Week Ahead | Asia Pacific: The Commodity Outlook

Research evidence excerpt

Australia Macro+ Week Ahead | Asia Pacific: The Commodity Outlook

IdeaM

What's Topical? MS Global Commodity Price Deck

After a very strong run since April 9, 2025, the Resources sector in Australia has

seen a meaningful drawdown in relative performance to the ASX 200 over the last

6 weeks (-10.4%). This has had investors focused on whether this is a function of

profit taking or something more fundamental linked to stage of cycle and demand

credentials. Our global commodity teams updated price deck highlights greater

variability in outlook for key commodities but from a market earnings sense, no

huge red flags - even Iron Ore which the team is most cautious on sees price

expectations of between US$90/t to $100/t over the medium term, hardly

disastrous for micro or macro estimates. Our sector team concurs keeping a

constructive industry view and sees the recent dip as one to rotate back to. From a

portfolio positioning perspective we retained our Materials and Energy OW. The

risk reward looks more attractive when compared to other side of the barbell of

Banks, Housing linked and Consumer exposures that face a building domestic

slowdown.

Below we look at the key take outs from the commodity outlook for MS

(metal&ROCK: The Price Deck – 3Q26: Micro Narratives, But Macro Matters [8 Jul

2026]).

A Periodical Review of the Elements

Resources remain an important part of the earnings debate for Australian equities, but the

commodity signal is now more commodity-specific. Our global Commodities team’s latest

3Q26 price deck led by Amy Gower argues that idiosyncratic drivers are likely to dominate

through 2H26, while two-way macro event risk remains, especially around the US Fed rate

trajectory. Metals price action has become more idiosyncratic this year, with relative