Zavier Wong, Market Analyst at eToro Group Ltd (Unlisted (US):ETRO), shares his three things to watch in Australia in the coming days.
AU reporting season
Australian reporting season moves into full swing, and it comes at a crucial time for the local market. After three straight years of negative earnings growth, companies are expected to finally deliver positive growth in FY26.
The question mark hanging over the market is valuations, made even more pressing after the RBA's rate hike last week. The ASX200 is trading well above its average valuation, which companies will need to deliver, not just meet expectations. There's not much room for disappointment when you're already priced for perfection. That means we’re likely to see companies that miss expectations punished more than being rewarded for beating expectations.
The materials sector is going to be the sector to watch. It's been the standout performer, rallying 30% in 2025, and the outlook for 2026 remains constructive. Copper is leading the charge, with supply-side tightness driving prices higher, and investors are increasingly bullish on the metal's role in electrification and data centre expansion. With the gold and silver prices rising and exports set to grow significantly in the current fiscal year, miners should be on investors' radar.
If companies can demonstrate they're managing costs effectively while still growing revenue, it validates the market's valuation. If not, we could see a reality check pretty quickly, especially with the current macro backdrop. Either way, it's going to be a critical few weeks for Australian investors with plenty of volatility ahead.
US inflation
After pushing higher in mid-2025, we’re beginning to see inflation retreat, but the path hasn't been straightforward. The record-long government shutdown complicated key economic readings like the October and November CPI reports, creating noise in the data that's made it harder to get a clean read on where price pressures actually stand.
December's CPI came in at 2.7% year-over-year, in line with expectations, and core CPI held at 2.6%, the lowest since 2021. Services inflation remains the focus for the Fed, which makes up the bulk of the report. Core services picked up slightly in December, led by shelter, but the broader trend continues to move in the right direction. Several tariff-exposed categories saw price cuts, adding evidence that tariff pass-through to consumers peaked back in October and has been slowing since.
However, markets are increasingly pushing back on the idea of rate cuts. The Fed has already signalled it's comfortable holding rates steady while it assesses whether inflation is truly under control.
McDonald's and Coca-Cola earnings
While the world is heavily invested in AI and technology stocks, it can often take our eyes off the market's steady performers that continue to provide the reliability that helps us sleep easily at night. While the Nasdaq has turned negative for the year after a strong start, McDonald's shares have climbed 6% and Coca-Cola 10%. These are two companies that have been through it all. They possess the kind of brand strength that makes them less vulnerable to external shocks, and in volatile markets, dividend payers also offer something precious: stability. They are typically mature, financially sound, and continue to reward shareholders even when markets pull back.
Both names report earnings this week, and they will give us a valuable window into how the consumer is holding up, given they’re bellwethers for discretionary spending. For McDonald's, the focus will be on whether the golden arches can continue driving traffic while maintaining margins. The company has been navigating a tough environment where lower-income consumers have pulled back sharply, even as higher-income customers have increased spending. Value offerings have been key to keeping customers coming through the door, and any commentary on how these are performing will be critical.
Coca-Cola's business commands around 45% of the carbonated soft drink market, and it owns five of the world’s top 10 brands (including Sprite and Fanta), which gives it a huge competitive edge over its rivals. Q4 earnings should reaffirm the resilience of the business, with revenue expected to grow by 5%, with margins set to remain steady.
Both McDonald's and Coca-Cola offer investors defensive qualities in this market. If they can demonstrate that demand remains resilient even as consumers tighten their belts, it reinforces the case for holding defensive positions. They may not be the flashiest names in the market, but in turbulent times, they’re the kind of stocks that help keep portfolios steady...and sometimes, boring is brilliant.