Australia Macro Mid-Year Outlook

The Australian investment case has transitioned toward a capex-led cycle as energy shocks and tight policy restrain consumption. Strategy remains Overweight Resources and Underweight Banks, targeting an ASX 200 level of 9,250 by mid-2027.

Key Takeaways

• 1.The Australian investment case has pivoted from consumption-driven growth to a durable capex-linked cycle, as tightening policy settings and an energy crisis pressure discretionary spending.
• 2.The RBA is expected to remain on hold for the remainder of 2026 after delivering 75bps of rate hikes, with eventual cuts projected for late 2027.
• 3.Equity strategy favors Resources and Energy over Banks and domestic cyclicals, with a mid-2027 ASX 200 price target maintained at 9,250.

Table of Contents

• A Change In The Landscape
• Equities – Five Key Themes
• Morgan Stanley 2026 Mid-Year Outlook In Charts
• Global Summary – Constructive, Not Complacent
• Key Market Themes
• Australia Macro Outlook: Sequencing A Slowdown
• Equity Market Outlook - Earnings Risk Caps Upside
• Australia – Within The Region
• Earnings – Past the Peak, Pressure Points Rising
• Valuation – Less Stretched
• Australia Macro+ Model Portfolio
• Australia Macro+ Focus List

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