A new report from Betashares has painted an optimistic picture for ASX resources and commodities.
It's been well documented the run being enjoyed by BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO).
These two ASX mining giants are both hovering around all-time highs.
Analysis from Betashares indicates this bull run could continue in 2026.
Image source: Getty Images
Changing of the guard for Australian large caps
Tom Wickenden, investment strategist at Betashares said in a report earlier this week that strong momentum in resource prices underpin the firm's positive outlook.
Iron ore has rallied and is holding above US$100 per tonne.
While further upside could be limited, he believes current levels support strong profitability for Australia's large-cap miners.
He also reinforced the strategic pivot of Australia's miners toward copper.
According to the report, BHP is now the world's largest copper producer, with the metal contributing 45% of its earnings, up from 29% a year ago.
Rio Tinto's copper assets currently contribute ~15% of group earnings, but production is expected to grow significantly through to 2030.
It could also be boosted further by a possible acquisition of Glencore plc (LSE: GLEN).
Mr Wickenden also said copper prices are at all-time highs.
Supply is constrained by multi-year project lead times, while demand is driven by the AI infrastructure buildout and energy transition.
For these reasons, we believe materials will drive large-cap returns in 2026, a notable shift from recent history. Over the last two years, financials accounted for 60% of the ASX 200's gains led by the 'Big 5'. While financials earnings expectations remain solid at 6.9% (which we expect can be met), we see meaningfully greater upside in materials given their earnings inflection from -18.0% in FY25 to 19.4% in FY26.
Commodities surge impact for small-caps
While Betashares now tips large-cap miners to lead the way in 2026, the report also said the rally in gold and critical minerals is set to be a key driver of Australian mid and small-cap outperformance in 2026.
The report said Australia's gold exports are expected to grow by ~47% in FY25/26, surpassing coal and natural gas to become our second-largest export behind iron ore.
Meanwhile, the October 2025 US-Australia Critical Minerals Framework, an US$8.5 billion partnership focused on rare earths and critical minerals including lithium and graphite, positions Australia as a strategic partner in countering China's dominance in processing capacity.
With escalating US-China trade tensions, we expect critical minerals to remain a focal point of geopolitical competition and national stockpiling.
Ultimately, mid and small-cap indices are positioned to benefit from this commodity rally.
How do investors gain exposure?
The tailwinds benefiting small-cap stocks have been well documented.
For investors looking to capture exposure to this sector, there are a few options.
BetaShares Australian Small Companies Select Fund (ASX: SMLL) provides access to a tailored portfolio of high-quality, profitable small-cap Australian companies.
Another option for Australian small-cap exposure is VanEck Vectors Small Companies Masters ETF (ASX: MVS).
For investors more focused on commodities, Betashares Energy Transition Metals ETF (ASX: XMET) offers exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earths elements.
Global X Green Metal Miners ETF (ASX: GMTL) offers exposure to global companies that produce critical metals for clean energy infrastructure and technologies, including lithium, copper, nickel, and cobalt.
It's worth noting these ASX ETFs do not exclusively target Australian critical minerals.
