After a lacklustre set of results from the banks, the portfolio is moving further underweight the banks, trimming NAB by 2%. At the same time, we are adding Steadfast Group at 2% to increase our weighting in the insurance sector, which unlike the banks has cyclical tailwinds over the next 12-24 months.

We remain underweight the two major supermarkets  - Woolworths (WOW) and Coles (COL). Supermarkets’ earnings received a ‘sugar hit’ from food inflation in recent years, but there is a risk this tailwind is easing. Cost pressures and elevated valuations are additional reasons for our underweight.

Copper demand is poised to increase over the next decade. Despite facing challenges in traditional cyclical sectors like construction, manufacturing, and appliances, copper demand should remain resilient, driven by an overriding trend: the global energy transition.

Infrastructure (and ‘infrastructure-like’) companies have lagged the broader ASX 300 since late June, amidst the ongoing headwind from rising bond yields. Despite the recent underperformance, the outlook for infrastructure remains positive, especially at this point in the economic cycle.

Recent updates from the ASX-listed general insurers, alongside the declaration of an El Niño event by the Bureau of Meteorology, have reinforced our constructive outlook for the domestic insurance sector, with our investment thesis for Insurance Australia Group (IAG) remaining intact.

Australian shares have been under pressure in recent months, largely due to ongoing strength in global bond yields. At a stock-specific level, this pullback has created attractive buying opportunities in select companies that have been oversold despite their strong fundamental outlooks.

The lithium sector continues to exhibit significant volatility. Critically, however, a positive structural outlook for lithium remains intact, which should support attractive long-term lithium prices and, by extension, significant cash generation from lithium producers.

Favourable supply/demand dynamics in the global energy market have pushed the price of oil >30% higher since late June to ~US$94 per barrel. The resilience of major economies and the lifting of pandemic lockdowns in China have contributed to robust global energy demand this year, while cuts from OPEC+ have tightened supply.