TMS Insights October 2026: Why US Markets Keep Rising
Why US Markets Keep Rising
Bond yields are climbing, yet US shares are hitting record highs. Australia isn't seeing the same resilience. In this episode of TMS Insights, Ben and Jeremy unpack why earnings growth is outweighing higher interest rates in the US, and what the widening gap with Australia means for investors.
In this episode:
- The S&P 500 is expected to deliver more than 20% earnings growth this financial year, compared with low single-digit growth for the Australian market. Ben and Jeremy discuss why that difference matters as bond yields rise.
- US financial stocks have fallen around 20% from their recent highs, yet the broader market has reached new records. With banks making up only around 5% of the S&P 500 versus 20 to 22% of the Australian market, the two markets are responding very differently to higher rates.
- BHP is once again Australia's largest listed company, but iron ore has slipped to around US$90 and the Australian dollar has fallen below US70 cents. Ben and Jeremy discuss how resources and offshore investments are helping offset weakness in Australian banks.
- The ASX 200 and S&P 500 are now trading on almost identical price-to-earnings multiples, despite the stronger earnings outlook in the US. The usual valuation premium for American shares has effectively disappeared.
- Rising bond yields in France, renewed inflation concerns and the strength of AI-related businesses in Japan and South Korea add another layer to the global picture, ahead of November's Australian bank results and company trading updates.
Companies discussed: BHP Group (BHP), Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), McDonald's (MCD) and Starbucks (SBU).
TMS Private Wealth is a boutique wealth management firm with offices in Sydney and Melbourne. If you'd like a conversation about how your portfolio is positioned, or a second opinion, our team is always happy to talk.
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