Australian Equity Strategy: Rate relief may be short term, but consumer stocks best placed for near term support

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Australian Equity Strategy: Rate relief may be short term, but consumer stocks best placed for near term support

Global Research

29 July 2026ab

Australian Equity Strategy Equity Strategy

AustralasiaRate relief may be short term, but consumer

stocks best placed for near term support Richard Schellbach

Strategist

richard.schellbach@ubs.com

+61-2-9324 2277

Softer CPI raises prospect that 'peak rates' may have been seen Lily Huang

CPI in Q2-26 was materially below the RBA's forecast, for both the headline and Associate Strategist

trimmed mean. Therefore, a rate hike in Aug-26 now appears much less likely. Our lily.huang@ubs.com

+61-2-9324 2656

economists still see the inflation outlook as 'too high' and have delayed the timing of the

next hike to Nov-26; they do however acknowledge that falling home prices could 'stop-

out' the RBA from moving. The broad consensus is now that the RBA is done, and that

their next move will be down.

Even if the next RBA move is down, equities have an uncertain path

RBA easing cycles have typically had mixed outcomes for equity prices. A rate-cutting

cycle did not help Aussie equities through the GFC as deep recession fears overwhelmed

investors. By contrast, stocks continued to charge higher through the late 1990s as

economies improved and Tech themes flowed through markets.

Real Estate challenges are much more this time than just rates

Historically the prospect of RBA rate cuts recharged the housing market. But we

recommend staying underweight the Real Estate sector given this cycle looks different,

as the Government tax changes from the recent budget seem to have structurally

changedthe game for property investors. Historically Banks have been the best

performing Australian equity sector in the 12mths following the first RBA cut of the