The ASX 200 struggled on Monday despite the bullish offshore leads from Wall Street - again, the Australian market remains more correlated to European bourses than the more widely discussed US peers. However, the local market managed to recover from early-morning weakness to end the first session of June marginally lower, as the miners again countered the ongoing weakness in the banking sector, primarily due to a 1% dip in Commonwealth Bank (ASX: CBA). With BHP Group (ASX: BHP) posting new all-time highs yesterday lunchtime and the “Big Four Banks” weighed down by concerns around the housing market post the budget, and high valuations compared to their international peers, we see no reason to fade the outperformance by the miners versus the banks:
Over the past fortnight, the ASX has enjoyed some much-needed support from a welcome shift in the interest-rate outlook, with softer-than-expected employment and inflation data easing concerns that the RBA may need to tighten policy further.
The ASX200 was clobbered 1.4% on Thursday as the US struck Iranian military targets for the second time this week and Kuwait said it responded to missile and drone threats, highlighting the fragility of the “so-called” ceasefire. Crude oil popped ~3% on the news, sending Asian indices and US futures sharply lower, with no clear end in sight to the geopolitical uncertainty. Global equities, not so much the ASX, may want to rally, but with roughly 20% of global oil and LNG supply effectively constrained by disruptions through the Strait of Hormuz, the market will need to see the waterway reopen soon, or the confidence currently underpinning risk assets may begin to fade quickly.
The ASX 200 roared back to life on Wednesday, reversing early weakness to close up 0.7%, with aggressive late-session buying sweeping through the market and reigniting risk appetite. Over 70% of the main board closed higher, but it was the rate-sensitive stocks that started to move after the April inflation numbers came in slightly better than expected - Consumer Discretionary (+1.8%), Tech (+1.8%), Utilities (+1.7%), and Real Estate (+1.6%) were the top four sectors on the day.
The ASX gave back Monday’s gains on Tuesday, slipping -0.4% to leave the market effectively flat for the week — a frustratingly familiar pattern that has played out repeatedly throughout May. The weakness was caused by a ~2% gain in crude oil after US and Iranian forces clashed near the Strait of Hormuz, highlighting the tension between the two sides even as they “claim” progress toward an interim peace deal; a similar tale to the last ~90 days.
The ASX 200 enjoyed a far better day than the Futures market was suggesting on Saturday morning, as hopes for a deal to end the US-Iran conflict improved investor confidence and pushed oil prices down by more than 4% during our trading session. Global markets from Tokyo to China and Australia embraced news that officials signalled the US was nearing a deal with Iran to reopen the Strait of Hormuz and restore oil flows - we’ve heard it before.
Over the weekend, President Donald Trump said a peace agreement with Iran had been “largely negotiated” and indicated a deal to reopen the Strait of Hormuz could be announced shortly. Iran also signalled negotiations were progressing, while US Secretary of State Marco Rubio said there may be “some good news” on the key shipping route in the coming hours, raising hopes the conflict may finally be moving toward de-escalation.
The ASX200’s roller coaster ride through May continued on Thursday with a strong +1.5% bounce as hopes increased that a deal to resolve the conflict in the Middle East was approaching. Unfortunately, we’ve heard it all before. Let's hope it will eventually come to fruition, but in the meantime, 3-weeks into May and triple-digit moves have become commonplace, even though the index is down just 0.5% for the month.
The ASX 200 fell 1.3% on Wednesday, closing at a seven-week low as inflation concerns weighed on bonds and equities across Asia. Selling was broad-based on the local bourse, with more than 80% of the main board stocks retreating, led by the previously high-flying Materials Sector (-2.1%), which suffered as rising bond yields pushed the likes of gold and copper lower - rising yields slow economic activity and provide a higher “risk-free” return from bonds or cash, compared to the likes of gold which pays no income. Weakness throughout the day was met with very little buying interest. To put the lack of “risk” appetite into perspective, only one stock rose more than 5%, while twelve fell by the same magnitude.
The ASX enjoyed a strong session on Tuesday, rallying +1.2% with exactly 75% of the main board finishing in positive territory. Consumer staples led the charge, with the major supermarkets bouncing strongly—Woolworths (ASX: WOW) gained +3.7%, while Metcash (ASX: MTS) and Coles Group (ASX: COL) both climbed +2.7%. However, from an index perspective, the rebound in the “Big Four Banks” did most of the heavy lifting, with CBA, Westpac and NAB accounting for more than a quarter of the ASX200’s gain, although insurers again outperformed on a percentage basis.
Over the past fortnight, the ASX has enjoyed some much-needed support from a welcome shift in the interest-rate outlook, with softer-than-expected employment and inflation data easing concerns that the RBA may need to tighten policy further.
The ASX200 was clobbered 1.4% on Thursday as the US struck Iranian military targets for the second time this week and Kuwait said it responded to missile and drone threats, highlighting the fragility of the “so-called” ceasefire. Crude oil popped ~3% on the news, sending Asian indices and US futures sharply lower, with no clear end in sight to the geopolitical uncertainty. Global equities, not so much the ASX, may want to rally, but with roughly 20% of global oil and LNG supply effectively constrained by disruptions through the Strait of Hormuz, the market will need to see the waterway reopen soon, or the confidence currently underpinning risk assets may begin to fade quickly.
The ASX 200 roared back to life on Wednesday, reversing early weakness to close up 0.7%, with aggressive late-session buying sweeping through the market and reigniting risk appetite. Over 70% of the main board closed higher, but it was the rate-sensitive stocks that started to move after the April inflation numbers came in slightly better than expected - Consumer Discretionary (+1.8%), Tech (+1.8%), Utilities (+1.7%), and Real Estate (+1.6%) were the top four sectors on the day.
The ASX gave back Monday’s gains on Tuesday, slipping -0.4% to leave the market effectively flat for the week — a frustratingly familiar pattern that has played out repeatedly throughout May. The weakness was caused by a ~2% gain in crude oil after US and Iranian forces clashed near the Strait of Hormuz, highlighting the tension between the two sides even as they “claim” progress toward an interim peace deal; a similar tale to the last ~90 days.
The ASX 200 enjoyed a far better day than the Futures market was suggesting on Saturday morning, as hopes for a deal to end the US-Iran conflict improved investor confidence and pushed oil prices down by more than 4% during our trading session. Global markets from Tokyo to China and Australia embraced news that officials signalled the US was nearing a deal with Iran to reopen the Strait of Hormuz and restore oil flows - we’ve heard it before.
Over the weekend, President Donald Trump said a peace agreement with Iran had been “largely negotiated” and indicated a deal to reopen the Strait of Hormuz could be announced shortly. Iran also signalled negotiations were progressing, while US Secretary of State Marco Rubio said there may be “some good news” on the key shipping route in the coming hours, raising hopes the conflict may finally be moving toward de-escalation.
The ASX200’s roller coaster ride through May continued on Thursday with a strong +1.5% bounce as hopes increased that a deal to resolve the conflict in the Middle East was approaching. Unfortunately, we’ve heard it all before. Let's hope it will eventually come to fruition, but in the meantime, 3-weeks into May and triple-digit moves have become commonplace, even though the index is down just 0.5% for the month.
The ASX 200 fell 1.3% on Wednesday, closing at a seven-week low as inflation concerns weighed on bonds and equities across Asia. Selling was broad-based on the local bourse, with more than 80% of the main board stocks retreating, led by the previously high-flying Materials Sector (-2.1%), which suffered as rising bond yields pushed the likes of gold and copper lower - rising yields slow economic activity and provide a higher “risk-free” return from bonds or cash, compared to the likes of gold which pays no income. Weakness throughout the day was met with very little buying interest. To put the lack of “risk” appetite into perspective, only one stock rose more than 5%, while twelve fell by the same magnitude.
The ASX enjoyed a strong session on Tuesday, rallying +1.2% with exactly 75% of the main board finishing in positive territory. Consumer staples led the charge, with the major supermarkets bouncing strongly—Woolworths (ASX: WOW) gained +3.7%, while Metcash (ASX: MTS) and Coles Group (ASX: COL) both climbed +2.7%. However, from an index perspective, the rebound in the “Big Four Banks” did most of the heavy lifting, with CBA, Westpac and NAB accounting for more than a quarter of the ASX200’s gain, although insurers again outperformed on a percentage basis.
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