What could be next for the ASX
- Nicholas Rundle
- 7 days ago
- 3 min read
Since the start of 2026 the ASX200 has been choppy and overall, uninspiring.
But when we break it down, there has been just one game in town.
Resources.
It's rather compelling. It also makes it hard to build a balanced, diversified portfolio because there's a lot of Toads in there if you're stepping outside the retail sector. An even then, the Mining sector has gone nowhere since The Donald decided throwing bombs at Iran was for the greater good.
None of this is much of a surprise with our economy on life support and the Government trying their hardest to put any one-off investing by changing the rules. Uncertainty is THE pet hate of investment markets and changing policy is as bad as it gets.
This week however might just have seen the start of the shift. The RBA pausing their interest rate rises and noting that while inflation remains high, the rate rises have impacted the economy. And it has, rate rises have given retirees more spending money while limiting young families with money. Don't get me started on this discussion.
And this pause occurs at time when the minimum wage got a nice 4.75% increase to help those who are struggling. With inflation running above average it's not undeserved, but it is inflationary.
Anyway, all that gets me thinking.
Retailers.
If the RBA holding begins to signal the end of the belt tightening it might just end the decline of the discretionary retailers. Since October 2025 JB Hi-Fi (JBH) has fallen 42%.
In May JBH provided a mixed update on 3Q26 sales, which showed continued growth momentum across most business segments, but CEO Nick Wells commented that there has been an increase in supplier component related costs and stock shortages with increase competition.
So, rates on pause.
Retirees winning from fixed rates over 5% and happily spending while they can.
And a wage increase.
For JBH $80 is going to be a crucial resistance point and if the market decides to break above this number we will likely see JBH push towards $90. On a fundamental basis with Earnings Per Share tipped to grow 7% in the current financial year and price targets averaging $89 (ranging $68 to $118) it seems the risk may just be skewing to the upside.
At this stage we haven't been buyers, but confirmation of a price recovery may just attract us.
But that isn't all. What about Real Estate?
It's clear from the image above that the Real Estate sector has a clear, inverse, relationship with the Australian 2-Year Bond rate and that Bond rate has changed. This has resulted in the Real Estate sector breaking out from the April-June sideways malaise.
Charter Hall Long-WALE REIT (ASX:CLW) closely tracks the index above:
If the data continues to support a cooling in the economy and inflation softens this trend should continue and that would mean the share price of CLW should continue up.
It's clear we are seeing some shoots of an inflection point in some sectors of the ASX, all while miners continue to hold up the broader index. This should give us some hope that the ASX will break through the upper blue line and on to new highs more than the opposite.
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