A $30 billion wipeout in Commonwealth Bank’s market value this week may mark the start of a broader shift in ASX leadership, with global asset manager VanEck warning investors the era of bank-led market gains is fading.
In its 2026 Australian Equities Outlook, VanEck argued the conditions that underpinned years of bank outperformance had reversed simultaneously, with sticky inflation, higher interest rates, weaker productivity and geopolitical volatility reshaping the local equity market.
The warning comes after Commonwealth Bank shares suffered their worst one-day decline since listing, falling 10.4 per cent on 13 May following a trading update that sparked concerns over bad and doubtful debts and the bank’s property investor loan exposure.
At the same time, BHP surged to record highs as copper prices rallied, reclaiming its position as the ASX’s largest listed company.
Betashares senior investment strategist Cameron Gleeson said the sharp sell-off reflected growing volatility around CBA, which he argued had become increasingly sensitive to disappointing news after years of strong performance.
“We’re seeing a bit more of this, particularly around earnings announcements. There’s a lot of price discovery going on, and investors are reacting to anything which is a sign of weakness by some pretty significant selling,” Gleeson said.
“We could be seeing the start of a regime shift. We’re in a structurally different earnings environment to the one that delivered the last five years of bank performance. Australian investors may need to look beyond the big banks to capture the next phase of opportunity on the ASX,” said Russel Chesler, head of investments at VanEck.
VanEck said the ASX 200 was increasingly masking a widening divergence between winners and losers, with materials stocks rallying more than 50 per cent over the past year while the ASX All Tech Index fell more than 30 per cent.
“This is no longer an index-level market. The ASX 200 is being pulled in two directions and the gap between the winners and the losers within the benchmark is wider than at any point since the post-COVID rebound. When dispersion is this high, equal-weighted approaches and active sector tilts do the heavy lifting that beta used to.”
VanEck noted Commonwealth Bank alone accounted for roughly 10 per cent of the ASX 200, amplifying the benchmark’s exposure to a single stock.
“Concentration risk in the major banks now cuts both ways. They have driven the index higher for years. They can drive it lower just as quickly. Investors should be mindful that CBA alone accounts for roughly 10 per cent of the S&P/ASX 200. When a single stock can move the benchmark by half a per cent on a single quarterly update, you are no longer running a diversified portfolio.”
The outlook identified materials, select industrials and mid-caps as the sectors best positioned for stronger risk-adjusted returns through the next stage of the market cycle.
The report forecast the materials sector would rebound from earnings contraction of 17.6 per cent in FY25 to growth of 13.2 per cent in FY26, supported by copper supply deficits, Chinese rare earth export controls and global infrastructure demand.
Mid-caps were described as the “sweet spot” during the latest earnings season after delivering the strongest earnings surprises and positive analyst revisions while still trading at a discount to the ASX 50 on forward earnings.
Technology stocks, however, remained under pressure, with VanEck arguing many Australian software companies were vulnerable to artificial intelligence disruption and higher-for-longer interest rates.
The report also tied the market rotation to broader macroeconomic risks, including persistent inflation pressures and the fallout from the escalating US-Iran conflict, which VanEck said had pushed oil prices above US$100 per barrel and complicated the Reserve Bank of Australia’s inflation fight.
“Australia screens as relatively attractive when set against global peers, particularly the United States, where index-level multiples now require near-perfect execution on AI capex and earnings to be sustained. If geopolitical volatility subsides and the earnings recovery continues to broaden, Australia could be one of the better risk-adjusted equity trades globally in the second half of 2026.”
“But that thesis only works if you own the right parts of the market. The bank-heavy passive trade is the most crowded and an expensive expression of Australian equities. The next phase of the ASX rally is unlikely to lift all boats. Investors will need to be more deliberate about where they take risk,” Chesler said.
