The February 2026 reporting season demonstrated the resilience of the domestic economy, supported by lower interest rates and rising commodity prices.
The earnings-momentum recovery that began in October 2025 was most pronounced in the Resources segment. We are now beginning to see this recovery extend to other sectors on the ASX.
At the market level, the overall EPS growth for FY26 and FY27 was revised higher over the month, to 13.5% and 8.0%, respectively.
At the sector level, this was mainly driven by upgrades within the Financials and Resources sectors, while the Healthcare and Consumer Discretionary sectors experienced the largest EPS downgrades.
From a valuation perspective, the recent market correction has lowered the forward P/E ratio to 17x, bringing it closer to fair value, with resilient earnings growth expectations for FY26 and FY27 potentially limiting further de-rating from current levels.
We maintain our slightly underweight exposure to Australian equities, cognisant of the tail risks to risk assets from the conflict in the Middle East.
