Weekly market update: AI spending, higher interest rates and your investment outlook

6 November 2026 | Forwood Planning

Investors are reassessing how quickly artificial intelligence spending will translate into profits, while Australian households face another interest rate rise. The Reserve Bank of Australia has increased the cash rate to 4.85%, keeping inflation and borrowing costs firmly in focus. For long-term investors, the key consideration is how these developments affect their financial plan—not simply the next market headline.

Why are technology shares under pressure?

Artificial intelligence remains a major investment theme, but investors are asking a more demanding question: when will the spending pay off?

Large technology companies are committing substantial amounts to data centres, computing infrastructure and AI development. Recent company results have increased scrutiny of those commitments, particularly where spending is rising faster than earnings or the benefits remain uncertain. This has contributed to sharp falls in some technology shares.

There is an important distinction between a promising technology and an attractively priced investment. A company can play a significant role in technological change while still facing questions about whether its future profits will justify its share price.

The recent selling reflects that tension. Investors are not necessarily dismissing AI’s potential; they are reassessing the price they are prepared to pay for growth that may take longer to arrive.

What does the RBA’s interest rate rise mean?

The RBA raised the cash rate by 0.25 percentage points to 4.85% at its November meeting. Its message was clear: inflation remains too high, and further tightening was needed to support its return to target.

For households with variable-rate mortgages, the practical issue is whether—and when—lenders pass on the increase. Higher repayments can leave less room for everyday spending, saving and investing.

The latest decision also challenges the view that inflation is steadily coming under control. The RBA has revised its inflation outlook higher and expects inflation to remain above 3% over the coming year. It is concerned that persistently high inflation could become embedded in people’s expectations.

That makes it premature to assume interest rates have peaked. The RBA’s published outlook incorporates market expectations of further increases, although those expectations are not a commitment about future decisions.

What is changing for fixed interest investments?

Higher bond yields are also part of the investment picture. The RBA reports that rising Australian yields reflect expectations of a higher cash rate path, alongside developments in global bond markets.

For investors considering fixed interest, it is useful to separate two questions:

  • What income could the investment provide?

  • How much could its market value fluctuate along the way?

A higher yield does not make every bond or bond fund equally suitable. The role of any defensive allocation still needs to be considered within the broader portfolio, rather than judged on income alone.

What should long-term investors focus on?

This week’s developments highlight the difference between market expectations and personal financial priorities.

Technology investors are reassessing future earnings, while the RBA is responding to persistent inflation. Both can influence investment markets, but neither provides a complete answer to how an individual portfolio should be positioned.

At Forwood Planning, our focus remains on alignment: keeping investment decisions connected to the purpose of your money.

Useful questions include:

  • Have your income needs, planned expenses or retirement timing changed?

  • Do you have an appropriate cash reserve for upcoming commitments?

  • Are you comfortable with the level of risk in your portfolio?

  • Has growth in a particular investment left your portfolio more concentrated than intended?

  • Does your strategy still reflect your circumstances and long-term objectives?

The aim is not to ignore changing conditions. It is to distinguish between developments that warrant a considered review and headlines that do not, by themselves, require a change of direction.

Discuss your financial plan

If higher borrowing costs, changing income needs or approaching retirement have affected your circumstances, contact Forwood Planning to discuss your investments, cash flow and broader financial strategy.

Call 07 3103 3038 or email info@forwoodplanning.com.au.

This update contains general information only and does not take into account your objectives, financial situation or needs. Consider whether the information is appropriate for your circumstances before acting. Investment returns are not guaranteed, and past performance is not a reliable indicator of future performance.