Monthly Market Update - End of August 2026

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Key takeaways August 2026

Australian shares rose 1.6% in August, underperforming international shares (hedged), up 2.5%. Strong performance in healthcare (up 18.1%) and materials (up 12.4%) supported positive Australian shares performance; while international shares (hedged) benefited from solid US corporate earnings, largely driven by the technology sector.

The Reserve Bank of Australia (RBA) held interest rates steady at 4.35% at its August meeting, noting that inflation remains above its 2–3% target. Given weak confidence, falling house prices, and the delayed effects of earlier rate rises, we expect the RBA to remain on hold for the remainder of 2026.

In July, the Australian unemployment rate rose to 4.5%, while employment declined by 15,800 jobs, pointing to some softening in labour market conditions.

The Australian dollar (AUD) recorded a second consecutive strong month, up 2.1% against the US Dollar (USD), to finish the month at US$0.72. Higher commodity prices helped lift the currency, while uncertainty over the outlook for US monetary policy remained ahead of the United States Federal Reserve’s (Fed’s) Jackson Hole Economic Policy Symposium.

We maintain a positive outlook on Australian government bonds* with growth below trend and inflation gradually returning towards the RBA’s target. International developed and emerging market shares* remain attractive, as strong earnings growth helps ease concerns about higher valuations.