iShares MSCI Australia ETF

EWA

Market cap $1.44B

S&P Global Ratings on Thursday lowered its issuer credit rating for the Australian Securities Exchange to "A+/A-1" from "AA-/A-1+", two weeks after a local regulator flagged ​governance and risk management failures at the stock exchange operator.

SYDNEY—Australia's inflation eased slightly in February, but remained well above the central bank's target range, keeping the door open for a further rise in interest rates.

Australian ETFs like EWA draw focus as energy shocks and RBA rate hikes fuel inflation fears.

The Reserve Bank of Australia increased the official cash rate to 4.10% as the conflict in Iran worsened existing concerns around an acceleration in inflation.

The growth data follows a monthly inflation report that showed price pressures continued to build in the Australian economy.

The iShares MSCI Australia ETF is heavily weighted toward financials (42%) and materials (24%), primarily Commonwealth Bank and BHP. EWA's financial sector faces headwinds from a flattening yield curve, rising funding costs, and highly leveraged Australian households amid rate hikes. Materials exposure is mixed: copper benefits from electrification trends, but iron ore faces demand risks from China's tepid growth and geopolitical tensions.

The data highlights that inflation remains a thorn in the side of the central bank, and that an increase in interest rates is highly likely to be repeated in coming months.

The S&P 500 is off to a dismal start in 2026, lagging most developed-market indexes as investors pull back from U.S. tech stocks with elevated valuations.

Australia's central bank raised its policy rate by 25 basis points to 3.85%. That marked the Reserve Bank of Australia's first rate hike since November 2023.

The iShares MSCI Australia ETF, which has generated respectable returns of 14% over the past year, is still lagging other developed markets and global stocks in a big way. EWA's heavy exposure to financials and materials shapes its outlook; banks face headwinds from likely rate hikes, although payouts could remain steady, while materials benefit from robust export demand. Despite some mean reversion appeal, EWA trades at valuation premiums (19x earnings, 2.5x book) over developed markets with only 6% long-term earnings growth on offer.