Macquarie is now predicting the Reserve Bank of Australia (RBA) board will hike interest rates at its meeting later this month, saying that stubbornly high inflation is likely to force its hand.

Data will force the Reserve Bank to act

In a research note released this week, Macquarie noted that trimmed mean inflation had spent 17 of the last 20 quarters above the RBA’s target band for inflation of 2%-3%.

Macquarie said the RBA had “run a monetary experiment” over the past couple of years, “hiking less than other central banks during 2022 and 2023 in an attempt to hold onto part of the fall in unemployment that occurred during COVID”.

They went on to say:

In the first half of 2025, it looked like the experiment had worked, with underlying inflation returning to the middle of the target band, allowing the RBA to claim victory by easing policy by 75 basis points. However, over the second half of 2025 both growth and inflation rebounded, forcing a reversal of the earlier cuts as the RBA acted to slow growth. The 75 basis points of tightening earlier this year is working, with growth in recent quarters below trend. However, with unemployment still around three quarters of a percentage point below the pre-COVID level, the RBA now seems to feel that output remains above the economy’s potential, suggesting that more needs to be done to bring inflation back to target.

Macquarie said wages growth in the second quarter was slightly below RBA expectations while July inflation was strong, however volatility in these numbers made it difficult to “discern signal from noise”.

RBA sending a clear message

But the broker said the RBA appeared to be sending clear signals about a rise in interest rates.

As they wrote:

Commentary … from RBA Assistant Governor Hunter has provided a clear steer on which side of the fence RBA staff have landed. Hunter highlighted concerns about oil prices and strength in the July CPI. While acknowledging the volatility in the monthly CPI series, she indicated RBA staff see enough signal in the data of stronger than expected inflation (pointing to strength in domestic factors such as market services and new dwelling price inflation).  

Macquarie said the conclusion they drew from this was that a 25 basis point increase later this month was now the most likely outcome.

The cash rate was last increased, by 25 basis points, on May 6, following identical increases in February and March.

The official cash rate now sits at 4.35%.

The post Macquarie makes a big call on a September interest rate hike appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are plenty of ASX shares to choose from when investing $5,000.

I would want to use the money on businesses I can see owning for years, with enough growth ahead to make patience worthwhile.

These three would be high on my list.

BHP Group Ltd (ASX: BHP)

I would put $2,000 into BHP.

The mining giant gives investors exposure to commodities that should remain important as the global economy develops, including iron ore and copper.

Copper is particularly interesting to me over the longer term. Electrification, renewable energy infrastructure, data centres, and expanding power networks all require significant amounts of the metal.

BHP already has major copper operations and continues investing to increase its output.

Its enormous iron ore business also remains important. BHP generates substantial cash flow that can support investment elsewhere in its portfolio, as well as dividends for shareholders when conditions allow.

Commodity prices will always move around, so BHP is unlikely to deliver smooth earnings growth every year.

But I think its scale, asset quality, and exposure to resources the world will continue needing make it a strong long-term holding.

Wesfarmers Ltd (ASX: WES)

I would invest another $1,500 in Wesfarmers.

What I like about Wesfarmers is the collection of businesses under its control.

Bunnings has built a particularly strong position in Australian home improvement, while Kmart has become an increasingly important contributor through its low-cost retail model. Officeworks and the group’s other operations add further sources of earnings.

These businesses also give Wesfarmers plenty of opportunities to keep improving rather than relying on one major expansion project.

Management can reinvest in existing operations, develop new opportunities, or direct capital towards areas where it sees better returns.

Wesfarmers shares are rarely priced like a bargain, and I would still pay attention to valuation. But for a long-term investment, I think there is value in owning a company with strong brands, experienced capital allocation, and several ways to grow over time.

NEXTDC Ltd (ASX: NXT)

My remaining $1,500 would go into NEXTDC.

This would be the most growth-focused investment of the three. NEXTDC develops and operates data centres across Australia and other Asia-Pacific markets. Demand for this infrastructure is increasing as businesses move more workloads into the cloud and artificial intelligence drives much greater computing requirements.

What gives me confidence in the opportunity is that NEXTDC is not simply building capacity and hoping customers eventually arrive.

The company has secured substantial contracted demand for future data-centre capacity, which gives it visibility over facilities that are still being developed.

There is plenty of execution risk. Data centres require enormous amounts of capital, and NEXTDC needs to deliver new projects efficiently while managing its funding requirements.

I still think the potential reward is attractive if demand continues growing as expected.

Foolish takeaway

If I had $5,000 available today, I would be comfortable spreading it across these three ASX shares.

BHP shares would give me exposure to long-term commodity demand, Wesfarmers brings a collection of high-quality Australian businesses, and NEXTDC offers much stronger exposure to the expansion of digital infrastructure.

I think that gives the money several opportunities to grow without relying on one company or one part of the economy.

The post Why I’d buy BHP and these ASX shares with $5,000 appeared first on The Motley Fool Australia.

More reading

• How much passive income can I earn off a $550,000 superannuation balance?
• Copper prices just hit a record high. What does this mean for ASX copper shares?
• 3 ASX growth shares experts think could double
• NextDC shares have fallen 14% in a month. Is the AI data centre boom over?
• $10,000 invested in BHP and CBA shares three years ago is now worth…

Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Picking the right ASX shares is starting to look a little trickier.

New analysis from Global X ETFs found that almost half of the top 300 ASX companies underperformed the broader market during August’s reporting season.

That might sound surprising, especially with the S&P/ASX 200 Index (ASX: XJO) spending much of 2026 moving higher.

The benchmark index is currently up more than 2% year to date.

But dig a little deeper and there has been a huge difference between the stocks getting rewarded and those being left behind.

So, why has stock picking become so tough?

No room for misses

August showed just how quickly investors were willing to punish companies that fell short.

Global X senior investment strategist Marc Jocum summed it up pretty well.

“This reporting season was unforgiving,” he said.

And the share price moves back that up.

Around half of ASX 200 companies recorded a daily move of at least 5% during August, making it one of the more volatile reporting periods in recent memory.

It also meant a decent result wasn’t always enough.

If guidance disappointed or the market had been expecting more, investors were quick to sell.

There was also a big gap in where the earnings growth came from.

Although headline earnings growth was the strongest in 4 years, much of that was driven by resources. But if you take mining stocks out of the equation, earnings growth fell back to single digits.

Winners and losers

There was also a pretty big divide between sectors.

Materials shares rose around 12% during August, while healthcare jumped almost 19%, its best month in more than 25 years.

Consumer discretionary, property and the big banks went the other way, with all 3 areas struggling.

There was some caution about what comes next, with forward earnings estimates being cut across parts of the market.

AI keeps coming up

Another thing that kept popping up during reporting season was artificial intelligence (AI).

Global X found around 60% of companies mentioned AI on earnings calls, with most talking about how it could improve productivity.

That’s a pretty big number and shows AI is no longer just a topic for tech companies.

But Jocum’s broader takeaway was probably the more important one for investors.

He said “the market is no longer a rising tide lifting all boats”.

That feels pretty accurate after August.

There are still plenty of opportunities on the ASX, but investors may need to be a lot more selective about which stocks they back.

The post Aussie stocks are getting harder to pick. Here’s why appeared first on The Motley Fool Australia.

More reading

• Macquarie makes a big call on a September interest rate hike
• 2 ASX shares with dividend yields above 8%
• 5 things to watch on the ASX 200 on Wednesday
• Could this exciting growth stock be set to triple? Morgans thinks it can
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.