Turning the page from Fiscal 2026 to Fiscal 2027

Turning the page from Fiscal 2026 to Fiscal 2027

As we begin Fiscal 2027, it is worth taking a step back to reflect on the major themes that shaped global markets over the past year. I explore the key developments across equities, bonds, interest rates, commodities and currencies, and consider what they may mean for investors going forward.

From Magnificent Seven to Memory Seven

In the three calendar years 2023-2025, the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla), rose by an average 333 per cent, turning $1.00 into $4.33.

That strong upward trajectory came to an end in the six months to June 2026, with an average decline of 2 per cent. With Microsoft (-23 per cent),Meta (-15 per cent) and Tesla (-6 per cent) leading the fall.

The baton has been passed to the “Memory” sector with an average 419 per cent capital appreciation across seven companies in six months to June 2026 being reported, namely: SanDisk (+858 per cent), Kioxia (+759 per cent), Micron Technology (+304 per cent), SK Hynix (+305 per cent), Intel (+278 per cent), Marvell Technology (+251 per cent) and Samsung (+177 per cent).

And to drive home the shift in perception, these seven companies recorded an average capital appreciation of 11-fold in the year to June 2026, with SanDisk up 49-fold, Kioxia up 34-fold, and both Micron and SK Hynix up 8-fold.

For some, this may bring back memories of the Poseidon Boom of 1969, when the Nickel price jumped four-fold £7,200/tonne, and the market frenzy drove the Poseidon share price from A$1 to peak at A$280 in early-1970. The Poseidon Boom is often cited as a classic example of speculative excess where investor enthusiasm became increasingly detached from underlying fundamentals.

A mixed picture for global markets – a look at major indices

With the exception of the U.S. and Japan, most share market indices were relatively subdued in the June 2026 half-year.

Japan’s Nikkei 225 was a standout performer, up 39.2 per cent for the six months to June 2026 and up 73.0 per cent over the 12 months to June 2026.

The technology-heavy Nasdaq also performed strongly, gaining 13 per cent for the six months to June 2026 and 29 per cent for the 12 months to June 2026.

For the year to June 2026, the Australian All Ordinaries Index was up 2.4 per cent, excluding dividends.

Over the six months to June 2026, the Hong Kong Hang Seng Index declined 10.7 per cent, whilst the Indian Sensex Index went backwards by 10.3 per cent.

Bond markets at a crossroads

Many bond markets appear to be in two minds; whether to sell-off with increasing sovereign debt risks, or to come down in yield as many commentators expect economic growth to slow over the medium-term.

The Japanese ten-year bonds, for example, were in negative territory in late-2019, and jumped by 1.29 per cent in the 12 months to June to 2.72 per cent.

In the U.S, the new Chairman of the U.S. Federal Reserve, Kevin Warsh, will be crossing his fingers that markets remain oblivious to the climbing U.S. gross federal debt to Gross Domestic Product (GDP) ratio.

A volatile year for commodities

Turning to commodities, we saw another eventful year across resource and alternative assets.

For the twelve months to June 2026, Gold rallied solidly 20.5 per cent to just under US$4,000/oz. Early in 2026, Gold hit US$5,300/oz. With the relatively weak Australian Dollar, gold producers had been enjoying phenomenal prices.

Bitcoin has more than halved to US$58,904 per coin from its record high of US$125,260.81, recorded in October 2025.

With the Chinese residential property sector crisis, including many property developers entering administration, it was surprising to see iron-ore finishing the year at ~US$100/tonne. With some new significant iron-ore projects coming on stream, it is possible the iron-ore price will come under pressure, and the Australian Treasury is targeting US$60 per tonne by the March 2027 Quarter.

Copper enjoyed a 20.4 per cent rally over Fiscal 2026, from US$5.11/lb to US$6.15/lb and with “decarbonisation” and the excitement associated with artificial intelligence (AI) there are no shortage of copper bulls.

Oil was up on the U.S.-Iran war to easily exceed US$100/ bbl., and then down to US$76/ bbl on the theoretical cease fire in June 2026. These “brushfire” type wars, often between few countries, now appear to be a constant.

Currency

On the currency front the A$ finished the financial year at around US$0.69, and saw some strength against the British Pound (1.92:1.0), the Euro (1.66:1.0) and the Yen (111.60:1).

In the 12 months to June 2026, the Japanese Yen has depreciated from ¥112 to ¥94 to the AU$,and hit a 40-year low against major currencies.

Interest rates

The Reserve Bank of Australia (RBA) increased on three occasions, by 0.25 per cent each, over the three months to May 2026 to 4.35 per cent. Together with an unfriendly Fiscal 2027 Budget, house prices are now expected to decline by around 10 per cent, as consumers and investors batten down the hatches.

Economic outlook

The U.S.-Iran war drove the oil price well above US$100/ barrel, and inflationary expectations for the June 2026 quarter are expected to be above most Central Bank targets. In turn, cost of living issues delivered underwhelming results for many companies dependent on discretionary spending.

Real GDP per capita has been in the doldrums for four years, and this is unlikely to change over the medium-term. Productivity is weak and Government expenditure and debt to GDP ratios remain disappointingly high.

Conclusion

As Fiscal 2027 begins, investors face a market shaped by shifting equity leadership, uncertain bond markets, elevated interest rates, volatile commodity prices and changing currency trends. While the outlook remains uncertain, the events of the past year serve as a reminder that markets can change quickly, making a disciplined focus on long-term fundamentals more important than ever.

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 40 years of industry experience.
David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.