ASX Plunges into Downgrade Cycle Amid Rate Hike Bets

The Australian Stock Exchange (ASX) has slumped into a downgrade cycle as investors bet on a rate hike by the Reserve Bank of Australia (RBA). This comes ahead of the August earnings season, which is expected to be boosted by a resurgence in corporate earnings. However, forecasts suggest that growth will slow down due to rising oil prices.

Market analysts have long predicted that 2026 would mark the beginning of profit growth for ASX-listed companies after three years of declines. According to forecasts, earnings are expected to rise by 12%, the strongest rate in four years and above the long-run average of 4.5%.

The RBA's decision to raise interest rates could push the economy over the edge due to its heavy dependence on diesel. A fourth rate hike this year would be a significant move, with investors already anticipating a spike in oil prices.