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As we head towards the end of the calendar year, it’s fair to say that when you compare the ASX 200 (or the XJO, if you’d prefer) to its many international sharemarket peers, we are by far the worst performers of the year.
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Here’s a quick way to think about this. Let’s run through a basket of our peers and look at what YoY returns our markets have returned in comparison. I am going to use the TradingEconomics indexes column. (I picked the data up specifically at at 1.30pm AEDT Sydney time on December 16.)
- ASX200: +3.11% YoY
- US100: +13.4% YoY
- GB100 (UK): +18% YoY
- DE40 (GER): +18.9% YoY
- FR40 (FRA): +10.4% YoY
- Ecuador Gen: +23.8% YoY
- Shanghai 50: +11.4% YoY
- JP225 (JAP): +25.8% YoY
- SENSEX (IND): +4.24%
At least, I suppose, we aren’t far off India. And there’s still two weeks left in the year! So anything could happen. For those who are visually minded, that same list above may be clearer with the below screenshot.
Also worth noting is, due to the way TE calculates these things, and that yearly data mightn’t have incorporated recent upside, Index data puts the XJO’s 1Y gains higher at +4.3%. Better than something starting with a three, but well off what we’ve seen in developed Asia, the U.S., and major Europe bourses.
(I threw in Ecuador just to make a point. We’re also outperforming Algeria and Malaysia at the time of writing, so there’s that.)
So is there good news coming?
Well, maybe that depends on your timeframes for what is “good” and “bad,” but Morgan Stanley analysts’ 2026 target for the XJO perhaps leave a lot to be desired.
According to their bean counters, Australian investors should expect a 2026 XJO target of 9,250pts, which I can’t help but feel might be a little bit conservative (or a lowball if you prefer,) because we weren’t actually far off that in October when we hit an intraday high around 9,115pts in October.
Of course, at time of writing, the market is closer to 8,600 points. So maybe we shouldn’t scoff (or, maybe I shouldn’t scoff to be more precise) at what is a fairly good bit of runway as far as potential targets for 2026 go.
AMP Chief Economist Dr. Shane Oliver puts it lower at a less-exciting 8,900pts, though he also expects uncertainty around the US economy to continue; geopolitical volatility to make stock picking (and index picking) more difficult than it used to be, and, obviously, the RBA cash rate decisions remain difficult to price in. (Dr. Oli expects the rate to be held at 3.6% throughout next year, make of that what you will.)
And it’s more than a given that the local at-home CPI reads from the ABS, coupled with RBA commentary around decisions meetings, will continue to be the most dominant local catalysts moving forward into 2026.
Copper, metal, silver in vogue
All in all, I don’t expect much to change, really. As you can here in the end of year podcast I recently recorded with HotCopper editor Isaac McIntyre, I imagine AI will remain very much a ‘is-it-a-bubble-or-not’ type concern.
But then there’s metals – and don’t forget, we’re talking about Australia here, and not the tech-heavy U.S. Precious metals prices are unlikely to stop running hard (especially given central banks are buying gold as a hedge against an uncertain future for the USD), and there’s also the background ‘megatrend’ story of copper.
For those playing at home, here’s a chart comparing gold, silver and copper together. Think of silver as a moon that elliptically orbits the larger planet of gold; and copper is doing its own thing, but still on the up-and-up in 2025.
That isn’t the only hard rock commodity story we discussed in the season finale for HotCopper Wire this year (episode 37!) – heading into 2026, we’ve also got the lithium revival story.
Battery metal bounceback: longevity the question
Long story short, CATL’s Jianxiawo mine remains in limbo, and even though it only supplies up to 4% of global supply, or thereabouts, Australian trading reaction for lithium stocks was strong on that news, given that we all still love and miss Pilbara Minerals.
On top of that, China’s Ganfeng chief came out and put his two cents to the market, that lithium has further to run in 2026, and investment bank analysis has come out saying the same.
This time, it isn’t EVs expected to drive demand, but instead Battery Energy Storage Systems (BESSies), or Big Batteries for short, which are what they sound like: large batteries the size of sea containers attached to power grids to allow renewable energy to be stored at night, meaning that if there’s a demand spike and the sun isn’t shining, solar power can still be used.
That’s the basic gist. And of course, here’s a lithium price chart for your consideration, but i’m going to use a 5Y chart so you can also contextualise this latest jump against relatively recent history.
I think that’s about all the Australian investor needs to know. After all, Australia’s economy isn’t particularly advanced. We sell rocks (making us an export economy, which are renowned for overvaluing assets like property and leading to homelessness and corruption problems), and we also have very expensive houses.
Let’s just hope that Simandou doesn’t prove to be as disruptive an iron ore producer as it could be to Australia’s economic security, though, dramas there could mean we end up with some cheaper fucking houses.
(Most of which, by the way, are owned by all those White Old Australians, and not really immigrants, despite how popular that claim is.)
So if you’re on the wrong side of the property ownership apartheid, scream at your grandparents, and not at new arrivals. And that’s a wrap! See you next year.
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