Economic update November 2026
Market developments during October 2026 included:
Market Summary
Global share markets eased in October as questions over the return on investment in artificial intelligence and renewed Middle East tensions overshadowed resilient economic conditions, while higher oil prices kept inflation in focus. Central banks continued to lean against inflation. The US Federal Reserve held rates steady but left the door open to a December increase, while stronger than expected September inflation data set the stage for the Reserve Bank of Australia’s rate rise in early November. Diversification provided some protection during the month. Australian shares, real assets and high quality government bonds all delivered positive returns, helping to offset weakness in global and emerging market shares.
Australian Shares
Australian shares rose, with the S&P/ASX 200 Index up 1.4%. Investors favoured more defensive and income generating sectors, with utilities (+9.3%) the strongest sector, followed by financials (+7.0%) and health care (+6.3%). Materials (-7.8%) was the weakest sector amid broader weakness in resources, while information technology (-3.5%) also declined as the same questions over AI spending that weighed on global markets affected local technology companies. Smaller companies underperformed, with the S&P/ASX Small Ordinaries Index down 6.4%, as weakness in resources and more speculative growth companies weighed on the smaller end of the market.
Elsewhere, gains were broad-based, with consumer discretionary (+3.6%), communication services (+3.3%) and industrials (+2.4%) all finishing higher. REITs (+1.7%) and energy (+1.6%) posted more modest gains, while consumer staples (+0.5%) was only slightly positive.
Data#3 Limited (DTL) was the top performing share in October, rising 32.9% after the company upgraded its first half FY27 profit guidance twice during the month, on the back of strong momentum in its IT solutions business. The worst performing share was Elsight Limited (ELS), which fell 62.7% after a weaker than expected third quarter raised concerns about how quickly the company will be able to monetise its pipeline.
International Shares
International shares fell, with the MSCI All Country World Index down 1.4% on a hedged basis, while a stronger Australian dollar reduced the unhedged return to -2.7%. The US declined as disappointing earnings from some major technology companies and concerns over the profitability of AI related spending weighed on technology and communication services. Global small companies held up comparatively well, with the MSCI World ex Australia Small Cap Index down 0.6%.
At the sector level, the pattern was broadly similar to the domestic market, with defensive sectors favoured and technology lagging. Communication services (-13.5%) and information technology (-6.9%) were the weakest developed market sectors, reflecting the same AI related concerns, while materials (-1.2%) and industrials (-1.1%) also edged lower. Most other sectors advanced, led by energy (+12.5%) amid higher energy costs, along with consumer staples (+10.7%), health care (+9.8%) and utilities (+8.2%). Real estate (+4.4%), consumer discretionary (+3.1%) and financials (+1.7%) posted smaller gains.
Most major regions finished lower over the month, with developed market shares down 1.9% unhedged. The US edged lower, down 0.9% in local currency terms, while Europe fell more sharply, with the EURO STOXX 50 Net Return Index down 2.1% amid higher energy costs and interest rate concerns. The UK was an exception, with the FTSE 100 Total Return Index up 1.3%. Japan was dragged lower by technology related weakness, with the Topix Total Return Index down 3.5%. Asia was the weakest region, with the MSCI AC Asia ex Japan Net Total Return Local Index down 7.9% and the MSCI China Net Total Return Local Index down 7.2%, as concerns over AI spending affected technology-heavy markets including China, Taiwan and South Korea. India held up comparatively well, with the MSCI Emerging Markets India Net Total Return Local Index up 0.3%, while the MSCI Emerging Latin America Net Total Return Local Index fell 4.3%.
The MSCI Emerging Markets Index fell sharply, down 9.1% unhedged for Australian investors.
Property and Infrastructure
Property and infrastructure delivered strong returns. Lower government bond yields and demand for more defensive assets supported income oriented investments. Global listed property rose, with the Financial Times Stock Exchange, European Public Real Estate Association and National Association of Real Estate Investment Trusts (FTSE EPRA NAREIT) Developed Index (hedged) up 2.4%, while the FTSE Global Core Infrastructure 50/50 Index (hedged) gained 7.7%.
Fixed Interest
Fixed interest markets delivered positive returns. High quality government bonds played their traditional defensive role, providing stability as share markets became more volatile. Australian fixed interest strengthened, with the Bloomberg AusBond Composite 0+ Yr Index rising 1.2%, while the Bloomberg Global Aggregate Bond Index (hedged) gained 1.8%. Credit markets or corporate bonds, lagged government bonds, particularly lower quality high yield bonds, as investors demanded greater compensation for taking on additional risk.
Alternatives
Preliminary estimates for October indicate that the index decreased by 1.3% (on a monthly average basis) in Special Drawing Rights (SDR) terms, after increasing by 0.9% in September. The rural, non-rural and base metals subindices all decreased in the month. In Australian dollar terms, the index decreased by 0.3% in October.
Source: Lonsec November 2026 (October update)
