NAB: Business confidence plunges and is a V shaped market recovery sustainable
Business confidence fell sharply in March as heightened global uncertainty weighed heavily on sentiment, while business conditions remained resilient, according to the latest NAB Monthly Business Survey.
Business conditions held relatively steady, signalling prior economic momentum. Cost pressures lifted quickly, with purchase costs and prices rising
Click here to read the full survey report.
What equity markets are pricing in and why the bounce
A V-shaped recovery in equities usually reflects expectations about the future, not current conditions. We are now just circa 2% off the all-time market high point on the 02/03/2026.
Markets tend to rally when investors believe:
(a) The shock is temporary
Even if the outlook looks bleak (oil shock, war, stagflation fears), markets often assume:
- the shock will fade or stabilise
- earnings will recover over a 6–18-month horizon
(b) Policy response is coming
Bad data → higher probability of:
- rate cuts
- fiscal support
Ironically, worse confidence data can be bullish for stocks because it implies easier policy ahead.
Why the disconnect between the market and the economy looks so stark right now
The current environment exaggerates the gap:
1. “Stagflation scare”
You’ve got:
- high inflation + slowing growth
- collapsing confidence (survey-based)
- but still reasonable activity levels (for now)
That creates mixed signals.
2. Timing mismatch
- Surveys = next 3 months sentiment
- Markets = next 12–24 months earnings
So markets are effectively saying:
“Yes, it looks bad now - but it won’t stay that bad.”
Is the market wrong?
Possibly - but not necessarily.
There are two competing interpretations:
Market is right if:
- inflation falls without a deep recession
- central banks ease in time
- earnings only dip mildly
Survey is right if:
- confidence collapse turns into real activity decline
- consumers pull back sharply
- unemployment rises
Bottom line
- The NAB survey is capturing fear and forward-looking caution
- The share market is pricing eventual recovery and policy support
So yes - there is a disconnect, but it’s mainly:a difference in time horizon, not necessarily a contradiction
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