Inflation pressures have eased from their peaks, interest rates are no longer rising aggressively, and markets are increasingly focused on what comes next rather than what’s just passed.

While uncertainty remains, the year ahead is likely to be shaped less by shocks and more by how economies, companies and investors adapt to a more normalised but still evolving environment.

Here are some of the key themes likely to influence markets in 2026.

Interest rates: expectations may matter more than decisions

One of the most important drivers for markets in 2026 is unlikely to be any single rate decision, but rather how expectations around interest rates evolve.

In Australia, easing inflation has shifted attention away from further tightening and towards how long rates might remain at current levels. Globally, investors are weighing the timing and pace of potential rate cuts against the risk that rates stay higher for longer than markets initially expect.

For investors, this means market volatility may increasingly be driven by changes in expectations, rather than policy moves themselves reinforcing the importance of staying focused on long-term fundamentals rather than short-term headlines.

Equity markets may reward selectivity

After strong periods driven by a narrow group of leaders, equity markets in 2026 may continue to reward selectivity over broad exposure.

Companies with resilient earnings, pricing power and strong balance sheets are likely to remain in focus, particularly if economic growth moderates. In contrast, businesses that rely heavily on optimistic growth assumptions may face greater scrutiny.

For Australian investors, this environment highlights the value of diversification across sectors, regions and investment styles, rather than relying on a small number of themes to drive returns.

Technology and AI: from narrative to execution

Artificial intelligence and broader technology innovation are expected to remain influential themes in 2026 but with a shift in emphasis.

Rather than broad enthusiasm, markets are increasingly distinguishing between companies that are demonstrating real-world adoption and earnings impact, and those still in earlier stages of development. As a result, fundamentals such as revenue growth, margins and execution are likely to matter more than narratives alone.

This evolution doesn’t diminish the long-term potential of technology, but it does suggest a more disciplined approach from investors as the theme matures.

Commodities and resources shaped by longer-term demand

Commodities are likely to remain sensitive to global growth expectations, geopolitical developments and structural demand trends throughout 2026.

In Australia, resource-linked companies continue to sit at the intersection of global demand, supply constraints and the energy transition. Rather than short-term price movements, longer-term factors such as infrastructure investment and changing energy needs may play a larger role in shaping performance.

What this outlook means for investors in 2026

As the year unfolds, 2026 is shaping up to be less about reacting to shocks and more about navigating a period of adjustment. Markets may continue to move unevenly, rewarding patience, diversification and a focus on fundamentals.

While no outlook can predict what markets will do, staying informed and maintaining a long-term approach can help investors navigate the year ahead with greater confidence.