Economic Update - September 2026

August delivered generally positive outcomes across share markets, with strong company earnings helping support investor confidence. Global markets were led higher by the United States and Japan, while Australian shares also advanced, driven largely by resource and healthcare companies. At the same time, investors continued to monitor inflation, interest rates and broader economic conditions both locally and overseas.

Economic Backdrop

Global economic activity remained reasonably resilient during August despite ongoing geopolitical uncertainty. Strong corporate earnings, particularly within technology-related sectors, supported share markets across many regions. In Australia, economic growth remained positive, with employment conditions continuing to hold up well, although inflationary pressures and higher interest rates remained important factors influencing households and businesses.

Australian economic data suggests growth has continued, but there are signs that higher borrowing costs and falling home prices are creating pressure on household budgets. Businesses have generally maintained solid financial positions, although growth outside the resources sector has been more modest.

Sector Performance at a Glance

Australian Shares

Australian shares rose during August, with the S&P/ASX 200 Index gaining 1.5%. Resources were among the strongest performers as commodity prices improved and company reporting results generally exceeded expectations. Healthcare companies also recorded strong gains following better-than-expected earnings announcements. Smaller companies outperformed the broader market, benefiting from their greater exposure to resource-related businesses and stronger-than-expected reporting season outcomes.

Technology and utilities also delivered solid gains. In contrast, financial companies came under pressure amid concerns about softer mortgage demand and slower credit growth. Consumer discretionary businesses were also weaker as higher interest rates and slower household spending affected sentiment. Listed property, industrials and communication services recorded declines during the month.

International Shares

International share markets also moved higher. The United States benefited from another strong technology earnings season, while Japanese shares delivered solid returns. Materials, technology, energy and healthcare sectors generally performed well across developed markets. Emerging markets produced mixed results, with gains in some parts of Asia offset by weaker performance in China and India.

Property and Infrastructure

Listed property and infrastructure assets experienced weaker performance during August. Investors generally favoured growth-oriented sectors such as technology and resources over more defensive, income-focused assets, contributing to declines across both property and infrastructure markets.

Fixed Interest

Bond market returns were mixed. Australian bonds declined slightly as inflation data remained firm and expectations increased that interest rates may stay higher for longer. Global bonds delivered modest positive returns, supported by income generation and relatively stable US government bond yields. Corporate credit markets generally remained resilient during the month.

What Markets are Watching

Investors continue to focus on inflation, interest rates and company earnings. In Australia, attention remains on how higher borrowing costs affect household spending, housing activity and business profitability. Reporting season highlighted that many companies achieved earnings growth through cost management and improved efficiency rather than strong revenue growth, making future earnings performance a key area of focus.

Markets are also closely monitoring commodity prices, which have provided significant support to resource sector earnings. At the same time, technology investment and spending linked to artificial intelligence continue to be important drivers of global market performance.

What This Means for You

August demonstrated that markets can continue to perform well even while economic challenges remain. Strong earnings supported many sectors, particularly resources, healthcare and technology, although performance varied considerably across industries. As always, market conditions are influenced by a range of economic factors including inflation, interest rates, business earnings and global developments, which remain important areas to watch in the months ahead.

Thanks to our research partners at Lonsec for assisting with the preparation of this Economic Update.