The ASX 200 erased early losses on Monday to start August on the front foot, closing up +0.5%, back above the psychological 9000 level. Gains were broad-based, with fewer than 30% of ASX stocks closing lower. Just as importantly, selling pressure was limited; the day's worst performer, Fortescue (FMG), fell only 3.8%, while six stocks rallied more than 5%, highlighting the market's underlying strength.
Despite a volatile month, the ASX 200 ended July up +2.3%, delivering almost exactly its average return over the past 20 years as the market heads into August. As we all know, there are “lies, damned lies, and statistics”, but keeping it simple, as the chart below illustrates, July is usually a very strong month for the local index:
The Dow recovered over half of Thursdays decline overnight as Microsoft surged +15.5% after strong Azure cloud growth reinforced confidence that AI infrastructure spending is yielding results, sparking a broad rebound across semiconductor stocks. The iShares Semiconductor ETF (SOXX) climbed more than +8%, with Micron Technology jumping +18% and AMD rising more than +13%, while South Korean memory giant SK Hynix rallied over +17%. The move reignited the momentum trade, with the iShares MSCI USA Momentum Factor ETF (MTUM) gaining more than +5% as investors rotated back into AI-linked names.
In contrast, Meta Platforms fell 8% after issuing softer revenue guidance and reporting a 91% decline in second-quarter free cash flow. Volatility may be high at the stock level, but this earnings season continues to support US indices, with ~68% of stocks beating EPS and ~79% on the revenue line - the balance of the S&P 500 stocks are due to report in the coming fortnight, with the local names also getting ready to face the music in August.
The ASX 200 surged through 9000 yesterday, closing up +1% at a fresh 4-month high, supported by a soft inflation read (CPI). Gains were fairly broad-based for a triple-digit day with ~70% of the main board advancing, led by the rate-sensitive stocks. As we’ve alluded to in the last few morning reports, the ASX has been getting its mojo back of late, and the soft CPI hasn’t hurt the backdrop for local stocks. Even the Australian Financial Review quoted our comments along these lines overnight:
The ASX 200 delivered a stellar albeit surprising performance on Tuesday, reversing early losses to close up +0.6%, posting a 6-week high in the process. The buying gathered momentum after lunch ahead of todays pivotal CPI inflation read, with bonds also strong; it felt like some hawks were squaring their positions in case the CPI comes in softer than expected. However, what was most impressive about the performance was the manner in which the local market shrugged off weakness across the region, where the KOSPI (-11%) and Japanese Nikkei (-4%) combined with weak US futures to paint a clouded picture for risk assets.
The ASX 200 surged +1.4% higher on Monday, delivering its best day in 6 weeks with 85% of the main board closing in positive territory. Only the energy sector closed lower as Middle East tensions eased, sending oil plunging ~9% and global bonds and equities rallied in a classic “risk-on session” for stocks. Ironically, as we head into the uncertainty of Wednesday's Australian Inflation read, it was the sharp reversal higher in bonds (yields lower) following oil's weakness that helped drive rate-sensitive stocks up on Monday, with Tech (+4.5%), Materials (+2.4%), and Real Estate (+1.7%).
US credit markets are the most hawkish they’ve been in the last 2 years, pricing in one and probably two 0.25% rate hikes by Christmas - not that long since their last rate cut by 0.25% in Dec’25, the final move in an aggressive 1.75% easing cycle. Markets have increased rate hike expectations this month following hawkish Fed signals, renewed inflation concerns from higher oil prices, and rising long-term bond yields as heavy government borrowing increased. A cooler-than-anticipated inflation print (CPI) earlier in the month helped, but the oil price quickly became the overriding factor.
The week's most-watched ETFs tell a consistent story, the AI and semiconductor trade is cracking at the edges, inverse and bear products are seeing genuine retail interest for the first time in months, and international equity ETFs are absorbing record inflows as the broadening rotation away from US exceptionalism accelerates. However, funds continue to flow into stocks, with fund flows into active primary equity ETFs totalling more than US$17.5 billion for the week ending July 24, 2026.
The ASX 200 erased early losses on Monday to start August on the front foot, closing up +0.5%, back above the psychological 9000 level. Gains were broad-based, with fewer than 30% of ASX stocks closing lower. Just as importantly, selling pressure was limited; the day's worst performer, Fortescue (FMG), fell only 3.8%, while six stocks rallied more than 5%, highlighting the market's underlying strength.
Despite a volatile month, the ASX 200 ended July up +2.3%, delivering almost exactly its average return over the past 20 years as the market heads into August. As we all know, there are “lies, damned lies, and statistics”, but keeping it simple, as the chart below illustrates, July is usually a very strong month for the local index:
The Dow recovered over half of Thursdays decline overnight as Microsoft surged +15.5% after strong Azure cloud growth reinforced confidence that AI infrastructure spending is yielding results, sparking a broad rebound across semiconductor stocks. The iShares Semiconductor ETF (SOXX) climbed more than +8%, with Micron Technology jumping +18% and AMD rising more than +13%, while South Korean memory giant SK Hynix rallied over +17%. The move reignited the momentum trade, with the iShares MSCI USA Momentum Factor ETF (MTUM) gaining more than +5% as investors rotated back into AI-linked names.
In contrast, Meta Platforms fell 8% after issuing softer revenue guidance and reporting a 91% decline in second-quarter free cash flow. Volatility may be high at the stock level, but this earnings season continues to support US indices, with ~68% of stocks beating EPS and ~79% on the revenue line - the balance of the S&P 500 stocks are due to report in the coming fortnight, with the local names also getting ready to face the music in August.
The ASX 200 surged through 9000 yesterday, closing up +1% at a fresh 4-month high, supported by a soft inflation read (CPI). Gains were fairly broad-based for a triple-digit day with ~70% of the main board advancing, led by the rate-sensitive stocks. As we’ve alluded to in the last few morning reports, the ASX has been getting its mojo back of late, and the soft CPI hasn’t hurt the backdrop for local stocks. Even the Australian Financial Review quoted our comments along these lines overnight:
The ASX 200 delivered a stellar albeit surprising performance on Tuesday, reversing early losses to close up +0.6%, posting a 6-week high in the process. The buying gathered momentum after lunch ahead of todays pivotal CPI inflation read, with bonds also strong; it felt like some hawks were squaring their positions in case the CPI comes in softer than expected. However, what was most impressive about the performance was the manner in which the local market shrugged off weakness across the region, where the KOSPI (-11%) and Japanese Nikkei (-4%) combined with weak US futures to paint a clouded picture for risk assets.
The ASX 200 surged +1.4% higher on Monday, delivering its best day in 6 weeks with 85% of the main board closing in positive territory. Only the energy sector closed lower as Middle East tensions eased, sending oil plunging ~9% and global bonds and equities rallied in a classic “risk-on session” for stocks. Ironically, as we head into the uncertainty of Wednesday's Australian Inflation read, it was the sharp reversal higher in bonds (yields lower) following oil's weakness that helped drive rate-sensitive stocks up on Monday, with Tech (+4.5%), Materials (+2.4%), and Real Estate (+1.7%).
US credit markets are the most hawkish they’ve been in the last 2 years, pricing in one and probably two 0.25% rate hikes by Christmas - not that long since their last rate cut by 0.25% in Dec’25, the final move in an aggressive 1.75% easing cycle. Markets have increased rate hike expectations this month following hawkish Fed signals, renewed inflation concerns from higher oil prices, and rising long-term bond yields as heavy government borrowing increased. A cooler-than-anticipated inflation print (CPI) earlier in the month helped, but the oil price quickly became the overriding factor.
The week's most-watched ETFs tell a consistent story, the AI and semiconductor trade is cracking at the edges, inverse and bear products are seeing genuine retail interest for the first time in months, and international equity ETFs are absorbing record inflows as the broadening rotation away from US exceptionalism accelerates. However, funds continue to flow into stocks, with fund flows into active primary equity ETFs totalling more than US$17.5 billion for the week ending July 24, 2026.
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