Offense wins elections, defence wins markets

“It’s the economy, stupid!”

– James Carville, 1992/PM Albanese, circa this week

Our Prime Minister recently quoted election advice from the mid-90s that helped Bill Clinton get over the line, while rolling out a new tax system…

Well, from the mid-90s of course.

Fast forward to today, and it looks like team “offend people” seems to be leading in the polls.

But apparently, according to Albo, it’s about the economy, I must be stupid.

The only thing more dire than my jokes is the Australian economy.

So naturally, today’s big trade on the ASX is around the “defensives”.

Our anaemic economy loves its duopolies and oligopolies.

The grocery empires of Coles [ASX:COL] and Woolworths [ASX:WOW] are the big winners over the last week of trading on the ASX (red + green = WOW and COL, blue = ASX 200):

Source: TradingView

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Looks a lot like the lockdown trade, doesn’t it.

And the numbers back it up. Coles has rallied 5% over the past week and Woolworths is up 3%, while the broader S&P/ASX 200 has fallen 2.2%.

When investors get nervous, they pile into the stuff we all keep buying no matter what. Bread, milk, toilet paper.

Demand for the essentials barely budges through the economic cycle, which is exactly why staples become the security blanket when things look shaky.

Meanwhile our favourite oligopoly in this country (the Big Four banks) are getting smashed, take a look at the S&P/ASX 200 Banks Index [XBK] over the last 3 months:

Source: TradingView

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Maybe our mining companies can save us?

Nope.

Here’s how the ASX 200 Resources Index [XJR] was trading over the last week:

Source: TradingView

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Materials were the worst-performing corner of the market. Gold changed hands around US$4,320 an ounce as traders repriced US rate expectations, and the big diggers wore it.

Most big resource names are down strongly today, which certainly stings the big funds that are positioned for a commodity cycle that still has many more legs to go.

And the punters are feeling it too

If you want a read on the national mood, look no further than consumer confidence.

It just fell back towards record lows.

The Westpac-Melbourne Institute Consumer Sentiment Index dropped to 80.6 in June.

That’s one of the weakest readings in the survey’s 50-year history, with pessimists outnumbering optimists by almost 20%.

The damage was concentrated in how people feel about their own back pocket.

Views on family finances compared to a year ago fell 7.5%, and expectations for the year ahead dropped 8.5%.

Westpac reckons the temporary halving of the fuel excise gave only limited relief, while sliding house price expectations suggest folks are getting jumpy about the recently announced tax changes.

In Westpac’s words, Australians are “clearly bracing for more bad news on the financial front”.

Cheery stuff.

And then over in the US… things
are going swimmingly

Spare a thought for the contrast. While we’re hiding in the cereal aisle, Wall Street is throwing a party.

The S&P 500 is up about 11% so far in 2026, and the tech-heavy Nasdaq is sitting near 16%. The Dow has tagged along for roughly 7%, lagging the glamour names as usual.

Volatility is sitting in the “mildly caffeinated” zone rather than full panic. The VIX recently closed around 21, which implies mid-teens swings over the year ahead. Choppy, but nobody’s jumping out windows just yet.

IPOs galore

Here’s where it gets spicy.

This week’s US IPO slate is worth a staggering US$76–77 billion in planned deal value.

And almost all of it is one name.

SpaceX is targeting a colossal 2026 float with an indicative deal size near US$75 billion.

To put that in perspective, a single rocket company is set to soak up roughly the same dollar value as basically every other deal on the calendar combined.

When the IPO window swings open this wide, it tells you risk appetite offshore is alive and well.

That’s the opposite of the mood at home, and that gap is the whole point.

Bargain hunting soon upon us?

So here’s the optimistic look at things.

From experience…

When the local crowd is this gloomy, when everyone’s crowded into Coles and Woolworths and selling everything with a bit of risk attached, that’s usually when the bargains start appearing.

Beaten-down ASX small-caps and micro-caps get thrown out with the bathwater in moods like this.

The good ones and the rubbish ones sell off together, which is exactly the kind of indiscriminate selling that patient investors love to see.

And the point remains…the structural tailwinds underneath certain commodities aren’t going anywhere:

Gold. The classic safe haven.

Uranium. Still needed to power the AI rollout. All those data centres have to plug into something.

Copper. Spot price near all-time highs, and you can’t electrify anything without it.

Lithium. Sodium-ion batteries are coming, but swapping it in quickly enough to keep a lid on prices is going to be hard.

So defence might win the next week of trading on the ASX.

But if you’ve got the stomach for it, the offence is quietly setting up in the parts of the market everyone else is too scared to touch.

Worth keeping the shopping list handy.