Schroders Australia anticipates a landscape of opportunity and volatility for investors in 2026, driven by government-led growth. According to Schroders, careful stock selection and a tactical approach will be crucial in navigating the diverging global markets, with the Australian market presenting a particularly compelling picture. Schroders Australia is a global asset manager offering a range of investment strategies and solutions to institutions, intermediaries and individuals around the world. The firm aims to deliver excellent investment performance by focusing on active management and sustainable investing.
Sebastian Mullins, head of multi-asset and fixed income, observes that while the world economy continues to expand, the balance of risks has shifted considerably. He noted that increased government spending, evolving political landscapes, and persistent inflationary pressures will create both opportunities and instability in global markets. Mullins highlighted the ongoing recovery in Australia, where growth is expected to rise to around 2 per cent, driven by increased household consumption and supported by strong consumer confidence and a robust job market.
However, Mullins cautioned that inflation remains a significant constraint, limiting the Reserve Bank of Australia’s ability to cut interest rates. He stressed the need for investors to adapt to the emerging fiscal-driven landscape. Globally, the concentration of market value in US technology stocks is a primary concern. Soaring valuations and increased corporate debt used to fund artificial intelligence infrastructure raise the risk of a significant market correction.
While major AI players remain profitable, the shift in funding, with companies like Oracle and Meta increasingly using debt rather than free cash flow to finance AI expenditure, introduces new risks. This evolving dynamic necessitates a vigilant and strategic approach from investors navigating the complexities of the 2026 market environment.
