Cyclicals

• Consumer Discretionary – retailers, autos, travel and leisure; highly sensitive to household spending and confidence.
• Materials – miners and commodity producers; earnings are heavily influenced by global growth and commodity-price cycles.
• Industrials – construction, transport and manufacturing; activity typically rises and falls with business investment and economic growth.

Financials and Real Estate are also highly cyclical, particularly through their sensitivity to interest rates, credit conditions and the property cycle.

To avoid cyclical stocks by definition negates the backbone of the ASX. We often talk about “cycles” in the MM reports with our general objective being to take the meat out of the sandwich as opposed to picking the exact beginning and end of such moves, e.g. the cyclical upturn we are seeing in miners today led by copper (Cu) as global electrification gathers momentum.

Nobody “knows” when cycles will begin/end but we can make estimates based on good old fundamentals such as supply and demand.

The chart below illustrates that “cyclical” isn’t one trade. Materials and Energy are cyclical sectors, but their strong 2026 performance has been driven more by the commodity cycle and supply dynamics, while other economically sensitive areas such as Consumer Discretionary and Real Estate have struggled under higher interest rates and pressure on household demand.