Markets – February 2026
Geopolitics took centre stage over January
2026 began with a never-ending barrage of geopolitical news from the US, including the capture and arrest of the Venezuelan president and Trump’s threat to acquire Greenland.
This was followed by a criminal investigation into the outgoing Chair of the Federal Reserve and the appointment of a new Chair – who comes (against all expectations) with credible economic and inflation-fighting credentials.
2025-2026
In early February the Reserve Bank of Australia raised the cash rate by 0.25% and signalled the potential for further hikes.
The move towards higher cash rates saw the Australian dollar rise above $0.70 against the US dollar.
Upward price movements in key commodities are also driving our dollar.
Six-monthly reporting season update
We have just reached the halfway point of the current six-month reporting season for the Australian share market.
This has been a volatile, unforgiving reporting season, with large share price swings driven less by absolute earnings and more by expectations, guidance, and confidence in forward earnings.
Early results suggest ‘good is no longer good enough’, while misses or cautious outlooks are being punished heavily.
Growth in a company’s earnings are being rewarded, but only when:
- Margins improved and
- Guidance was upgraded or reaffirmed convincingly
- Healthcare
- Technology
- Discretionary retail.
Commonwealth Bank – CBA delivered improved underlying net interest margins and lower bad debts. The share price jumped 6.8% the day of the announcement.
James Hardie – JHX announced better-than-expected operating performance alongside improved margins, and management lifted its 2026 earnings guidance. The share price improved 10.9% the day of the announcement.
ResMed – ResMed delivered better-than-expected performance, with improved leverage and profit margins driven by manufacturing and logistical efficiency improvements. The share price jumped 3.1% following the results.
BHP – BHP reported a strong profit update this week, with first‑half profit up more than 20%, driven largely by higher copper earnings and supported by solid cash flows and an increase of 46% in the interim dividend. The share price improved 4.7% the day of the announcement.
Companies that disappointed:
Cochlear – COH performance underwhelmed (yet again), negatively affected because of extended contracting for their Nucleus Nexa system (the world’s first ‘smart’ cochlear implant system).
CSL – CSL’s interim report release turned into a messy affair with the CEO leaving, a large $1.6bn impairment and the core business Behring underperforming expectations. The other core businesses of Seqirus (vaccines) and Vifor (iron products) performed better than expected. The share price fell 6.9% following the announcement.
Pro Medicus – Pro Medicus delivered record interim revenue and earnings, but margins disappointed amid higher staff costs and weaker contributions from the Trinity contract (one of the largest not‑for‑profit healthcare systems in the United States). The share price tanked 23.8%.
The ‘SaaSpocalypse’
Over recent weeks, global software and technology shares have fallen sharply. Commentators have labelled this change in the software-as-a-service (SaaS) sector as ‘SaaSpocalypse’.
Despite the dramatic name, this pullback is not unusual and does not reflect a sudden collapse in the quality of these businesses.
The rapid rise of artificial intelligence (AI) has added uncertainty for SaaS companies. AI brings long-term benefits, but it is changing how software companies operate. It can increase costs, intensify competition, and put pressure on pricing, even as it improves productivity and customer outcomes.
Companies that successfully integrate AI into their products will ultimately emerge stronger.
This sell-off has affected both well-established, profitable companies and younger growth businesses.
Historically, periods like this tend to shift focus back to fundamentals such as reliable cash flow, strong balance sheets and sustainable profits.
Kauri Wealth Management is a Fee for Service investment advisory business and as such my advice is built around ongoing personal relationships with my client base. Personalised independent advice is backed up by a breadth of industry knowledge.
I accept a limited number of new clients each year and would be happy to discuss this further with you. Please don’t hesitate to contact me.
Russell Lees
Senior Adviser
Phone: +61 439 852 963
Email: russell@kauriwealth.com.au
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