Stay With Cyclicals Amid Tech Woes, UBS Australia Says

Watch on YouTube ↗  |  February 10, 2026 at 04:04  |  7:53  |  Bloomberg Markets
Speakers
Richard Schellbach — UBS Australia Equity Strategist

Summary

Richard Schellbach of UBS Australia says he is upbeat on the Australian earnings season, with FY26 EPS growth expectations rising to about 12% from 3% six months ago, led by miners and domestic economic strength. He favors cyclicals over tech-related defensive growth, expects offshore investors to narrow their underweight to Australia, and sees a rising Australian dollar as supportive for Australian stocks and commodities. He also says Australian consumer stocks should be okay despite weaker sentiment.

  • UBS Australia equity strategist Richard Schellbach is relatively upbeat on the Australian profit season.
  • FY26 EPS growth expectations for the Australian market have risen to about 12% from 3% six months ago, led by miners and domestic strength.
  • He is skewed toward cyclicals as PMI is above 50, earnings are being upgraded, and tech-related defensive growth names are experiencing a shakeout.
  • He expects the offshore underweight to Australia to narrow and sees a rising Australian dollar as historically consistent with Australian stock outperformance versus global stocks.
  • Mining equities are viewed as relatively healthy on China stabilization and a lower US dollar index, though China growth is now only 4-5%.
  • Australian consumer stocks should be okay despite softer sentiment, helped by low unemployment, wage growth, and strong end demand.
  • Risks mentioned include mixed consumer confidence, elevated valuations, and the strong AUD, though he argues rising AUD is generally supportive for Australian equities except healthcare.
Ideas
Richard Schellbach UBS Australia Equity Strategist 0:44
Upbeat on Australian earnings, ASX 200
He is relatively upbeat on the Australian profit season: FY26 EPS growth expectations for the Australian market have risen to about 12%, up from only 3% six months ago, driven by miners but also by genuine underlying domestic economic strength. This supports broad Australian equity/ASX 200 exposure.
ASX 200 HIGH
Richard Schellbach UBS Australia Equity Strategist 1:11
Australian miners healthy on China, weak dollar
The mining equity space, about a quarter of Australian market cap, remains relatively healthy. Chinese growth has stabilized at a lower 4-5% pace and a declining US dollar index is supportive for commodity prices, which has driven strong outperformance in Australian mining shares; BHP is noted at a record high.
Australian mining equities HIGH
Richard Schellbach UBS Australia Equity Strategist 2:46
Australian consumer stocks should be okay
Consumer stocks should be okay despite softer Westpac sentiment. The survey has mixed signals and previously did not predict a spending collapse; low unemployment at 4.1%, returning wage growth, broad economic improvement since August/September, and strong end demand support the Australian consumer.
Australian consumer stocks MED
Richard Schellbach UBS Australia Equity Strategist 3:09
Australian dollar strength likely continues
The Australian dollar is rising with RBA tightening expectations and a strong domestic/global economy. History shows a rising AUD is correlated with commodity-market momentum and Australian stock outperformance versus global stocks, so upward AUD moves are supportive rather than a pure earnings headwind; he expects the story to last a bit longer.
AUD HIGH
Richard Schellbach UBS Australia Equity Strategist 3:39
Commodities supported by China, weak dollar
Commodity markets are relatively resilient, with upward momentum helping Australian equities and the AUD. Chinese growth stabilization and a declining US dollar index are supportive for commodity prices, underpinning the mining and materials outlook.
DBC MED
Richard Schellbach UBS Australia Equity Strategist 3:49
Reallocate into Australia versus global
Offshore investors have been underweight Australia for a long time, and he expects that underweight to narrow. A rising AUD has historically been associated with Australian stocks outperforming global stocks, making this a good environment to reallocate into Australia.
Australian equities relative to global equities HIGH
Richard Schellbach UBS Australia Equity Strategist 4:40
Favor Australian cyclicals over tech
He is skewed toward cyclicals: PMI is above 50, earnings upgrades are broad, and economic data point to a cyclical environment. A shakeout in defensive growth/tech names makes Australian domestic cyclicals, which are detached from tech, both the momentum area and a safe haven for rotation.
Australian cyclicals HIGH
Richard Schellbach UBS Australia Equity Strategist 4:56
Avoid tech amid rotation to cyclicals
There is a shakeout in defensive growth and tech-related names, which have already been weak. That is pushing investors toward domestic cyclicals as both an earnings-momentum and safe-haven rotation away from tech.
XLK MED
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This Bloomberg Markets video, published February 10, 2026, features Richard Schellbach discussing ASX 200, Australian mining equities, Australian consumer stocks, AUD, DBC, Australian equities relative to global equities, Australian cyclicals, XLK. 8 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Richard Schellbach  · Tickers: ASX 200, Australian mining equities, Australian consumer stocks, AUD, DBC, Australian equities relative to global equities, Australian cyclicals, XLK