Stocks to Watch, Should RBA Resort to Rate Hikes in 2026

The Australian markets were expecting easing interest rates some time ago but under changed circumstances and inflation concerns, some analysts are now viewing possible hikes in 2026. Two sectors that have historically held up well during RBA hiking cycles are resources and consumer staples, and the following ASX companies in these sectors present compelling investment opportunities for investors.

Woolworths Group Limited (ASX: WOW)

had a steady start to FY26 as total group sales for the 14-week first quarter rose 2.7% to $18.5 billion which was supported by improving customer sentiment and stronger digital engagement.
The company is cautiously optimistic as it enters the second quarter since management noted that sales have already improved in Q2 to date and the company expects further progress as value initiatives and digital investments continue to show results.

Woolworths is focused on improving customer value metrics, rising digital traffic, higher Everyday Rewards engagement and stable performance across essential food and household goods.

Household spending on essentials, particularly food and groceries, is usually highly resilient across economic cycles which supports WOW’s outlook even if there is a rate hike.

Australian Agricultural Company Limited (ASX: AAC)

has delivered one of its strongest first half results as favourable beef market conditions, disciplined execution and rising global demand for premium Wagyu supported the highest H1 operating profit driven by higher average beef prices and a strategic increase in cattle sales volumes.

Financial performance improved as total revenue reached $232.9 million which showed a solid rise over the previous period while operating profit increased to $39.8 million.

The company’s momentum reflects stronger pricing outcomes and a clear focus on lifting operational efficiency which helped strengthen results.
AAC is relatively resilient because global demand for high quality beef is growing at a massive rate helped by long-term protein consumption trends which will offset the effects of a rate hike.

Sandfire Resources Limited (ASX: SFR)

got off to an impressive start to the new fiscal year as copper equivalent production reached 35.5kt which was about 5% above plan for the September quarter.

The company reported $328 million in sales revenue and $157 million in underlying operations EBITDA which reflects solid financial performance for the period.

Sandfire’s outlook remains strong as both operational hubs are on track for higher production in the second half of FY26 while exploration activity in Spain and Botswana is expected to expand resource potential further.

Even in case of a rate hike, Sandfire is poised to do well because copper has exceptional long-term demand and the company’s healthy cash position reduces the need to issue debt at higher rates.

Alcoa Corporation (ASX: AAI)

recently completed the sale of its entire 25.1% stake in the Saudi Arabia joint venture which lifted the quarterly earnings.

Sales reached US$2.995 billion and net income attributable to shareholders was US$232 million helped by gains from joint-venture divestment.

Alcoa expects the Aluminium segment to benefit from stable production levels and stronger pricing while the Alumina segment should see sequential improvement because of lower production costs.

Alcoa is in a good spot because aluminium and alumina demand is tied to long-cycle sectors such as construction, packaging and energy transition infrastructure which are poised to do well regardless of interest rate fluctuations.

(Source: Company Reports)