Australian shares: Mining boom fails to save ASX from worst year since 2022
While overseas investors reaped the rewards of the global AI boom through semiconductor stars, the ASX trailed as analysts pin their hopes on another year of resources-led earnings growth.
Australian shares posted their worst year since 2022 after a broad advance for the miners failed to offset a horror year for tech and healthcare businesses hammered by rising interest rates.
For the 12 months ending June 30, 2026, the flagship S&P/ASX 200 Index returned 2.8 per cent excluding dividends to trail inflation, which regularly topped 3 per cent over the period.
Overseas investors fared much better as the MSCI World Index returned 19 per cent, Wall Street’s tech-heavy Nasdaq 100 gained 24 per cent and the UK’s FTSE 100 added 9 per cent. South Korean and Japanese markets fared even better, fuelled by booming profits for high-tech manufacturers producing computer chips linked to the mania for artificial intelligence.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.On the S&P/ASX 200 the best-performing sector was materials. It jumped nearly 45 per cent thanks to stunning climbs for gold, copper and lithium miners, including BHP, Rio Tinto, Mineral Resources, and Newmont Mining.
“Really, with only mining holding up the fort, you could say we were lucky not to do worse over the last financial year,” said Michael McCarthy the chief executive of Moomoo Australia. “At the end of the (financial) year the government also had an attack on the housing market, so that hasn’t helped given the implications it has for Australian banks.”
The two worst performing sectors on the ASX 200 last year were tech and healthcare, down 39 per cent and 38 per cent respectively. The healthcare sector was battered by shock profit downgrades from hearing aid giant Cochlear. It tumbled 60 per cent over the past 12 months as sales disappointed.
Elsewhere blood products and flu vaccine giant CSL is off 52 per cent over the past year. It jettisoned its chief executive and warned of sluggish sales partly as Americans turned sceptical of flu vaccines.
“Healthcare was really a story of company specific problems,” said McCarthy. ‘It’s one of those things, both companies had problems at the same time, but I don’t think it’s due to any broader themes.”
Australian tech stocks slump, overseas jumps
Listed software businesses also plunged in value in FY 2026 to reverse years of gains as investors worried they will lose customers to companies offering AI based services.
“The massive underperformance of our big tech and software stocks has also really been a hit,” said McCarthy. “Rightly, or wrongly, people are worried AI is going to impact these software companies and they were on high valuations to start with. Then you throw in the worsening macro-economic environment, we’ve seen three interest rate rises, soft growth and renewed inflation so it’s not a good backdrop for our growth stocks.”
Over the past 12 months cloud accounting platform Xero saw more than $14 billion in shareholder wealth erased as it tumbled from $178.24 per share to $71.76.
Global logistics software provider WiseTech Global crashed around 70 per cent as its founder Richard White endured more lurid headlines about his private life and the company lost support on corporate governance worries.
The plunge in local tech stocks came despite Asian and US share markets soaring to create trillions of dollars of value for shareholders in their listed computer hardware and semiconductor chip manufacturers.
Some of the standout overseas players that surged in financial 2026 include Samsung, SK Hynix, TSMC, Intel and Micron thanks to their soaring profits linked to demand for AI.
“AI has been killing software stocks everywhere, and especially in Australia,” said Damien Klassen the founder of Nucleus Wealth. “But it’s very hard for Australia to get into high tech manufacturing like semiconductors now. You need a whole eco-system, so the decision should’ve been taken 30 years ago, or you would need a 20-year investment plan today and that’s not going to happen.”
However, Mr Klassen also warned the boom in overseas semiconductor stocks may burst as it is based on huge demand and rising prices that may fall away.
“These companies are making hay now and that’s great, but computer memory and chip demand has always been very cyclical and in a few years they could be making losses as supply floods the market,” he said.
Top performers
The best performing company on the S&P/ASX 200 was little known scandium miner Sunrise Energy Metals. It rocketed 2040 per cent on investors’ bets its mining operation in Western New South Wales could reduce Western dependence on China for critical mineral supplies.
The second-best performer was lung imaging company 4D Medical. In 2014 its Melbourne-based founder Professor Andres Fouras sold his family’s Melbourne home to fund the business that fetched a $2.4 billion valuation on Thursday, despite years of initial struggle to get its sales off the ground.
Other top gainers included multiple mid-sized miners benefiting from rising commodity prices linked to the war on Iran and associated inflation shock.
Elevera Lithium, a Brisbane-headquartered, North American lithium producer formed by the merger of Sayona Mining and Piedmont Lithium, rocketed 508 per cent as prices for the battery ingredient jumped.
“Inflation’s been well above target for 12 months,” said McCarthy. “And we haven’t yet seen the secondary inflation impulses from the Middle East. We’ve seen the energy impact on rising prices, but we’ve not seen the impact of increased fertiliser and plastic costs, so the outlook for Australian shares in particular isn’t great.”
Outlook
On Thursday, the S&P/ASX 200 closed down 0.1 per cent to 8717 points to post its second straight loss to start financial year 2027. Morgan Stanley’s Australian equity strategist Chris Nicol currently expects the market to climb around 6 per cent over the next 12 months to a high of 9250 points.
Morgan Stanley expects energy and mining stocks to continue to outperform and help take the market beyond its prior record high of 9200.9 points from last March.
According to Dow Jones, analysts’ consensus estimates now call for average earnings per share to increase by up to 13 per cent over the 12 months to June 30, 2027.
The Reserve Bank is expected to lift interest rates one more time by 25 basis points this year to take the cash rate to 4.6 per cent. However, some economists believe the central bank is done lifting rates after already completing three rate hikes in 2026 and will move to ease rates in 2027 as house prices slide and growth slows.
