BHP overtakes CBA as miners reclaim ASX dominance amid copper boom and Australian house price downturn

Miners are reclaiming their dominance of the Australian share market for the first time since 2011, as a copper boom and falling house prices reshape wealth creation in 2026.

Investors who positioned for the shift ahead of August’s profit reporting season have been rewarded. Shares in mining giant BHP have climbed 11 per cent over the past month, while Commonwealth Bank tumbled 10.5 per cent.

The 20 per cent performance gap in just over 20 trading days could widen further after CBA warned the housing downturn is deepening across the country.

Australia’s largest lender now expects house prices in Sydney and Melbourne to drop by more than 10 per cent, with peak-to-trough declines of about 8 per cent in Brisbane, Perth and Adelaide.

Four reasons miners may still beat banks

This week analysts Citi analysts pointed to four reasons the banks could struggle to match the resources sector for the remainder of 2026.

The first is falling profit forecasts. Citi says that influential analysts marginally downgraded their forecasts for banks’ profits in financial year 2027, after August’s reporting season.

Lower profits equal potentially lower dividends and share prices.

Second, the banks entered August trading at historically elevated valuations, while miners looked comparatively cheap.

“While the bank results were ok, the same could not be said for the outlook which sees slowing [lending] volume growth, margin pressure, cost inflation and patchy asset quality,” Citi wrote.

Citi even said the miners also failed to impress with their profit outlooks, but their still cheap valuations provide more room to run higher if commodity prices climb.

The third factor is that if investors sell the banks, they have to reinvest the money elsewhere.

Resources are an obvious alternative, especially for large investors that don’t want to risk falling too far behind the market as a benchmark.

“Given CBA’s elevated premium over peers and larger market cap, it becomes an obvious funder for a trade out of banks and into resources,” Citi says.

It thinks BHP’s ascendancy over CBA in terms of share price performance can continue, but only if resources prices remain strong and banks’ earnings forecasts continue to fall.

That dynamic could continue to favour BHP over lenders such as CBA.

Finally, Citi says the failure of rising long-term bond yields to translate into higher bank valuations.

Traditionally, bank shares have benefited from higher long-term bond yields because a steeper yield curve can support lending margins for businesses that borrow over shorter periods and lend over longer ones.

Globally and in Australia, the borrowing costs of governments are surging due to worries around an inflation rebound linked to excess debt and the war in the Middle East.

Some of the rising cost of debt is also linked to the trillions of dollars being invested into artificial intelligence and data centres.

According to Citi this rotation of capital is another reason to think bank shares are unlikely to recapture the strength they showed over the last few years.

Market’s future

The great rotation into resources and out of interest rate sensitive lenders means broker Barrenjoey says the miners now account for 26.7 per cent of the S&/ASX200, which is the most since 2011.

BHP alone accounts for more than 12.3 per cent of the ASX, meaning investment and superannuation wealth is now tilted to the mining industry again.

Despite this, Citi is not entirely negative on the banks. It does think CBA is a sell, with a neutral rating on NAB and Westpac.

But ANZ it has a buy. The bank’s new chief executive, Nuno Matos, is working to take costs out of the business and is rumoured to be eyeing a cash- and equity-financed takeover offer for business lender Judo Bank.