The reporting season for companies listed on the Australian stock market has shown those exposed to global investment themes growing at a faster rate than those exposed only to the local economy, according to Fidelity International.
Fidelity portfolio managers Sam Heithersay and James Abela said the recently ended reporting season showed the dispersion between and within sectors has continued to grow, making it harder to ignore when it came to asset allocation.
Heithersay noted mining companies and others exposed to global themes, such as artificial intelligence (AI) infrastructure and electrification, benefitted from strong capital spending, while those more exposed to the Australian economy were impacted by higher interest rates and weaker housing resulting from changes in the federal budget.
“You can see that divide partly reflected in the 2026 financial year earnings. Earnings growth across the ASX 200 was around 12 per cent, but if you took out resources, it was more like 5 per cent. Clearly, a disproportionate amount of growth is coming from companies exposed to global rather than domestic investment cycles,” he said.
Abela added there were similar trends in the mid-cap part of the market where resource companies had earnings per share growth around 30 per cent this year, while other stocks saw single-digit movement.
“The resources sector has been particularly strong, led by gold and copper, which continue to benefit from supportive global tailwinds. Some healthcare and consumer names also performed well, but, overall, reporting season was fairly challenging,” he stated.
Heithersay pointed out while the domestic economy had its weaknesses, those issues were not uniform across the market.
“Household spending was stronger than expected in July and throughout reporting season we heard of pockets of resilient demand,” he said.
“What we’re seeing is perhaps a more uneven, or K-shaped, consumer environment, where spending patterns differ significantly across income groups, household balance sheets and product categories.”
Both managers noted investor focus on the immediate future was a hallmark of the reporting season, with Heithersay observing it appeared to be a key factor this year.
“Some companies delivered strong 2026 financial year earnings, but still saw their share price fall because expectations for the 2027 financial year were softer,” he said.
“That probably reflects how different the next 12 months could look from the 12 months just reported, with higher interest rates, budget changes and a growing divergence between domestic and global growth making the rear-view mirror less useful than usual.”
Abela added this had moved return expectations away from long-term investments.
“Companies that can deliver earnings growth and give investors confidence today, whether in resources or AI, are being rewarded, but if the opportunity is still five or 10 years away, it feels too distant and uncertain for the market to pay for,” he said.
“Flows are therefore moving towards tangible assets that generate cash flow, shorter-duration certainty and quality. Companies that cannot offer this are likely to come under pressure.”