February 2026 Westpac Market Forecast

The recent Westpac Market Outlook report for February 2026 has highlighted significant movements in risk sentiment affecting alternative assets. Notably, commodity markets experienced dramatic swings due to US President Trump’s foreign interventions and threats to the Fed’s independence, resulting in a 30% increase in gold and 70% surge in silver prices. Despite subsequent fluctuations and a 32% drop in Bitcoin prices, traditional assets like stocks and bonds remained relatively stable, except for a continuous sell-off in the US dollar.

The global economy has seen some clear trends heading into the new year, with growth holding up better than anticipated in several regions. In China, authorities need to provide additional domestic support to encourage household consumption and confidence, as relying solely on expanding net exports may not be sustainable. The European Central Bank is expected to maintain its current stance as inflation remains at target levels, while the Bank of England may implement further rate cuts with decreasing inflation.

Some economies, like the US, have seen a more positive trend in jobs growth and incomes, reducing downside risks to economic activity. This shift has led to a delay in the forecasted final rate cut by the FOMC to June. On the contrary, the Reserve Bank of Australia made a surprising move with a 25 basis point rate hike in February, affecting growth prospects for 2026 and 2027. Meanwhile, New Zealand’s economic recovery has been more stable, prompting the Reserve Bank of New Zealand to consider normalizing its policy later in the year.

Australia has reported stronger-than-expected data, with consumer spending accelerating through Q4 and into early 2026. Inflation has also shown upward momentum, leading to a 25 basis point rate hike by the RBA in February, with another hike expected in May. Commodity prices have remained strong, with gold leading the gains, along with coal, nickel, copper, and oil, resulting in an upward revision of end-2026 price forecasts.

In the global foreign exchange markets, the US dollar has depreciated significantly, reaching a near 4-year low and settling 15% below its mid-2022 peak. New Zealand’s economic data has shown strength, leading to expectations of OCR increases in 2026, although the RBNZ may hold off until the end of the year. The United States is expected to see normalized growth in 2026, while China needs pro-active stimulus for sustainable growth above 4%.

Overall, the outlook for various regions as outlined in the Westpac Market Outlook report indicates a mixed landscape of economic growth, policy shifts, and market volatility, emphasizing the need for proactive measures to address challenges and capitalize on emerging opportunities.