Will we get a stock market correction in the coming months?
Asked on the Switzer Show where markets go over the next year, AMP deputy chief economist Diana Mousina gave an answer that sounds more like two.
Mousina put two-bob each way, so to speak. The house view is “still positive. We think that we’re going to see good returns.” And then: “within that time, there’s just so many downside risks that I think that we could see another 10 to 15 per cent correction.”
Both halves are AMP’s published position, and both appear in the same note its chief economist Shane Oliver put out on 4 September, three days before the show: one in his run-through of the week’s market developments, the other in his outlook section.
“The risk of a correction in shares remains high,” Oliver wrote, and “returns should still be okay for the next 12 months as a whole thanks to continuing economic growth with recession avoided.”
The two are compatible because they measure different things. One is where the index finishes. The other is how far it falls on the way. A market can drop 15 per cent in October and still end the year up.
Oliver’s list of triggers runs to rising bond yields at a time when equity risk premiums over bonds are low, potential Fed and RBA rate rises this month, rising oil prices, worries about an AI bubble, and political uncertainty ahead of the US midterms. Those elections are on 3 November.
Mousina reached for that last one on the show too: “Midterm years tend to be one of the worst years for US shares,” she said.
Could it have already happened?
On the correction that has already happened this year, Mousina said “we thought it could have been even higher. We haven’t had that yet, but the time is still young.”
The early-2026 fall was real but did not quite reach the technical threshold of a correction. The S&P 500 set a record close of 6,978.60 on 27 January and troughed at 6,343.72 on 30 March, a fall of 9.1 per cent. AMP called it “a mild correction” at the time, with US shares down 7 per cent and Australian shares down 8 per cent from their highs.
Markets have more than recovered since. The S&P 500 closed at 7,718.60 on Friday, up 12.75 per cent for the year and about 1 per cent below its August record. The ASX 200 closed at 8,920.8 on Tuesday, down 1 per cent and its lowest close in six weeks.
And that bad news might keep on rolling.
AMP’s year-end 2026 target for the ASX 200 is around 8,900 points. The index is already there, with nearly four months to run. The Australian 10-year bond yield is at levels last seen in 2011, and in the same note Oliver wrote that it “wouldn’t be surprising” to see it push up to around 5.5 per cent. Plus, national home prices are falling.
So what could push us from “mild” to a real correction?
Mousina says: “It could still happen before the end of the year, especially if we get more concerns about Iran.”
