As we say goodbye to the summer holiday period, 2026 kicked off with some encouraging signs but it comes with a sting in the tail as global uncertainty continues to shake things up.
There was a surprise drop in unemployment in December to 4.1%, the number of jobs available increased and household spending grew.
However, these elements have also contributed to persistently increasing inflation. In a higher-than-expected result, CPI rose 3.8% in the 12 months to December, up on the November figure and exceeding forecasts by economists and the RBA.
Many commentators are now predicting at least two, and perhaps-even three, interest rate rises this year.
The Aussie dollar remains strong, finishing the month at US$0.70. It’s up 11.4% since US President Trump’s inauguration while the US dollar has suffered, falling 11.2% during the same period.
The S&P/ASX 200 climbed 1.8% in January, reaching 8,869 come month’s end, but there’s still ground to be made up to reach last October’s peak.
The Westpac–Melbourne Institute Consumer Sentiment Index slipped 1.7% lower to 92.9 in January from 94.5 in December.
Position your portfolio for what’s next
A volatile geopolitical landscape, rapid technological shifts and evolving energy systems are helping to reshape investment returns.
As we settle into 2026, the challenge for investors is in understanding and taking advantage of (or avoiding, if necessary) these global trends.
The artificial intelligence boom has taken much of the oxygen in the market. The tech giants have committed massive infrastructure spending with global data centre investments reaching a record $61 billion in 2025, cementing the evolution from a speculative investment.i
These titanic financing needs are reshaping how capital is deployed, according to S&P Global 451 Research. More than $900 billion is needed for data centre investment over the next four years.ii
Some analysts warn of an AI bubble, noting that several of the Magnificent Seven stocks – the most influential companies in the US market – underperformed the S&P 500 in 2025. Others argue the boom has longer to run, citing historical cycles since 1920.iii
Nonetheless, investment opportunities are beginning to broaden into software and services as the sector matures.
These investments have become a dominant contributor to growth in the United States, accounting for 80 per cent of private domestic demand growth in the first half of 2025. While the US and China are leading the data centre charge, commanding more than 60 per cent of global capacity, players across Europe, the Middle East and Asia-Pacific are racing to establish their own digital sovereignty.iv
Australia ranks at the lower end of advanced economies in rates of adoption and trust in AI, according to a Reserve Bank report.v
Yet, Australian research and development investment in AI is experiencing significant growth. AI-related patents, while still low by world standards, almost quadrupled in the last decade, according to a National Artificial Intelligence Centre report.vi
The energy transition
The global energy mix is undergoing a significant shift with accelerating investment in electric transport, renewables and grids, driven by massive growth in demand and improved supply chains.
Capital flows to the energy sector rose to more than USD3 trillion last year and are forecast to hit USD3.3 trillion this year, partly fuelled by the dramatic cost reductions in solar power and battery storage.vii
This surge in spending creates investment opportunities directly in equities focused on the energy value chain. Infrastructure funds and private equity are also targeting renewable generation and storage assets for long-term, inflation-linked returns.
Navigating wars and tariffs
The markets are digesting a fragmented global economy pushed and pulled by ongoing conflicts and the shifting US tariff policy that are affecting supply chains, inflation and risk.
The risks to financial stability are also caused by stretched asset valuations, sovereign bond market pressures and the rising influence of non-bank financial institutions, the International Monetary Fund warns.viii
As a result, ‘safe havens’ have become a feature of many portfolios. Investors looking for protection from currency instability have headed to gold, pushing its price ever higher. Meanwhile, institutional investors have made defence stocks a cornerstone of their portfolios as many nations increase defence spending.
Beyond traditional assets
As traditional stock and bond correlations become less predictable, many individual investors are looking toward ‘alternatives’ in the hunt for stability . These alternatives include:
- Infrastructure – such as toll roads and utilities
- Private equity – offers a way to capture value in unlisted companies. New private equity funds are emerging to shake up the sector, allowing shorter term capital commitments.
- Private credit (or private debt) market – offers floating-rate exposure, which can be a valuable hedge if interest rates are high. In Australia, the $224 billion private debt market accounts for some 14 per cent of all corporate lending.ix
Next steps
Looking ahead, success may hinge on positioning portfolios to capture emerging opportunities across technology, energy, geopolitics and alternative assets while mitigating the risks.
Please get in touch to talk about how to navigate the new opportunities.
i Investment in data centers worldwide hit record $61bn in 2025 | The Guardian
ii Data Centers: Are The Winning Odds Less Certain I S&P Global Ratings
iii US market boom-bust cycles – where are we now?
iv Look Forward: Data Center Frontiers | S&P Global
v Technology Investment and AI: What Are Firms Telling Us | RBA
vi Australia’s AI ecosystem | Department of Industry Science and Resources
vii World Energy Investment 2025 | IEA
viii Global Financial Stability Report, October 2025 | IMF
ix Australian Private Debt Market Review 2025
Your retirement. Your way. Your adventure.
Retirement has often been seen as a time to slow down and enjoy the simple pleasures of daily life. And for many, that’s the dream. But retirement is no longer defined by one image or one path. In fact, it can be something much more expansive. Today, retirement is increasingly viewed as a time of freedom, possibility, and reinvention.
Retirement isn’t about stepping back. It’s about stepping into a new chapter where you decide what comes next.
Even if you are not yet there, and retirement is still a way off, it’s never too soon to think about who you want to be, what gives you joy, and start to gravitate towards living your dreams.
Let go of conformity, embrace freedom
Of course, you can live your dreams at any stage of your life but the exciting part about retirement is that you are no longer bound by the expectations that shaped your earlier years. You don’t have to earn a living anymore, so what you do with your time can be driven purely by passion, curiosity, or purpose.
For much of our lives, we learn to conform. We wear the suits, follow the rules, meet the deadlines, and often suppress our wilder ideas or untapped creativity to fit the roles expected of us, whether as professionals, parents, providers, or partners.
But something shifts later in life. With age often comes clarity, and a new kind of confidence. Retirement can be the moment when we stop asking what others think we should do and instead, begin to ask what our hearts are calling us to do.
This is your opportunity to push boundaries, shed old labels, and express your true self without apology. It is a time to honour your inner voice, whether that means embracing bold adventure, creating, starting over, or simply doing what feels meaningful to you.
Unconventional can be unforgettable
Retirement can be the perfect time to try something unexpected or bold. Consider these inspiring examples:
Isabella Rossellini
After being let go by Lancôme at age 45 for being “too old,” Rossellini redefined what aging looks like. She went back to school in her 50s to study animal behaviour, wrote books, bought a working farm, and later, in a full-circle moment, was rehired by the same brand that once let her go. Now in her 70s, she continues to model, act, write, and farm, all on her own terms.
Diana Nyad
At 64, Nyad swam from Cuba to Florida, a journey of 110 miles through open ocean, after four earlier attempts. It was a dream she had carried her whole life, and she proved that persistence and passion don’t expire with age.
Harriette Thompson
Harriette ran her first marathon in her 70s and, at 92, became the oldest woman ever to complete one. Her story is a celebration of physical endurance and mental strength at any age.
Anthony Hopkins
Well into his 80s, the Oscar-winning actor continues to create. He acts in major films, paints, composes music, and shares his work with younger generations online. He shows that creativity and passion do not have a use-by date.
Mother Teresa
Mother Teresa received the Nobel Peace Prize at age 69 for her work with “Missionaries of Charity,” a world-wide organization that helped the sick, the poor, the dying and left an incredible legacy of benevolence that continues today.
Finding your joy
This chapter of life gives you the rare opportunity to redefine yourself, or finally be yourself, in ways that may not have been possible earlier in life.
Whether your dream is to travel the world, volunteer overseas, write a novel, take up painting, or pursue a long-held interest that never fit into your working life, now is your chance.
And it doesn’t have to follow tradition. Retirement can be adventurous, creative, active, or entrepreneurial. It can be spent on a cruise ship, in a mountain village, running marathons, making movies. And you don’t have to set the world on fire – if what makes you happy is watching your roses bloom then go for it! The point is, this part of your life, is yours to shape.
Retirement is a time to live fully and follow your own path to what brings you joy.
What will your next chapter be?
Holidaying off the tourist trail
When we dream of an overseas holiday, our minds often drift to iconic landmarks, bustling cities, and well-trodden tourist paths. While these destinations have their allure, travel to popular destinations is booming and comes with challenges so there are advantages to venturing off the beaten track and seeking out the hidden gems.
Travel is booming – and creating some headaches
It’s no secret that we Aussies love to travel outside our own country. Last year nearly 10 million of us headed overseas, marking a 12 per cent increase from the previous year, and this year is shaping up to continue the trend.i And it’s not just us enjoying getting out there and travelling the world, global figures anticipate international travel will soon exceed pre-pandemic levels and surpass 2 billion for the second time ever.ii
That adds up to a lot of people out there travelling and some popular destinations are showing the strain with skyrocketing prices, excessive queues, damage at historical sites and environmental impacts all being felt.
Tensions are high in some areas with tourists in Barcelona, Spain recently doused in water by frustrated locals and authorities in the historic city centre of Florence banning new short-term holiday rentals to try to relieve some of the pressure of over-tourism.
Taking the road less travelled can help areas suffering from over-tourism and support those communities who would welcome more visitors.
Supporting communities that need it
Tourism plays a significant role in the economic growth of many communities around the world and there are many places that would really benefit from the tourist dollar. The money you spend as you travel can contribute meaningfully to local economies and help support small businesses, artisans, and entrepreneurs, ensuring that future generations can continue to enjoy unique destinations.
But there are plenty of less altruistic reasons to seek out the hidden gems when you travel though.
Authentic Encounters
One of the lovely aspects of traveling to less touristy places is the opportunity to immerse yourself in local cultures. Away from tourist hotspots, communities maintain their unique traditions, cuisines, and ways of life. Imagine strolling through a market where locals gather to sell fresh produce, handicrafts, and homemade delicacies, or stumbling upon a hidden café where the owner shares stories of their town’s history. These encounters create lasting memories and offer a genuine glimpse into the daily lives of people from different corners of the world.
Unspoiled natural beauty
Nature enthusiasts will find bliss in exploring destinations that are off the typical tourist radar. Picture deserted beaches with powdery sand and crystal-clear waters, hiking trails winding through lush forests, or breathtaking untouched landscapes. Whether you’re seeking solitude in nature or hoping to capture stunning photographs without a sea of selfie sticks in the background, less touristy places often boast natural beauty that remains unspoiled and awe-inspiring.
Affordable adventures
Traveling to less touristy places can also be kinder to your wallet. Accommodation, dining, and activities in popular tourist hubs tend to come with inflated price tags due to high demand. In contrast, destinations that are yet to be discovered by the masses often offer more affordable options. You might find charming family-run guesthouses, budget-friendly eateries serving local dishes, and reasonably priced excursions that allow you to stretch your travel budget further.
Destination dupes
Doing a little homework can point you in the direction of alternatives to popular destinations.
For example, instead of Venice – which is literally sinking under the weight of tourism -consider visiting the town of Trieste, an old port town by the Adriatic Sea. If you are after stunning beaches and clear aqua water, Palawan in the Philippines is a good alternative for the Maldives. Or for an alternative to over touristed St Tropez in France, Turkey’s Bodrum coast offers comparable glamour and affordable luxury. Doing a little research can uncover similar destinations that offer the experience you are seeking, with all the benefits and none of the problems of the overhyped placed.
While the allure of ticking off the list of famous places is understandable, exploring less touristy places offers a wealth of unique experiences to the visitor, and benefits the local communities. So, the next time you plan an overseas holiday, think outside the square of the obvious destinations, and discover the hidden gems.
i CATO reveals new trends with Australia’s 10m international travellers – Travel Weekly