The ASX200 slipped 0.3% last week after dancing around the psychological 8600 level almost daily. While the index traded in a tight range, it was a very different story on the stock and sector level, with utilities surging +3.4% while real estate fell -3.2%, two theoretically rate-sensitive sectors moving in opposite directions. However, most of the action unfolded in the resources with a strong advance by iron ore in the back end of the week, helping heavyweight BHP Group (BHP) bounce over $2 to test its March high.
By the close on Friday, the winners and losers enclosure showed ongoing stock/sector rotation. Nowhere was it more evident than within the Materials Sector, where the rare earths and lithium names boomed, ably supported by the heavyweight iron ore miners. In contrast, the gold and copper names endured another week to remember. Outside of some significant moves on company news, the local uranium names again struggled while their US peers tested new all-time highs.
Winners: Iluka (ILU) +29%, Lynas (LYC) +16.9%, Mineral Res (MIN) +10.1%, Helia Group (HLI) +9.9%, Origin Energy (ORG) +8.6%, IPH Ltd (IPH) +7.9%, Web Travel (WEB) +7.9%, IGO Ltd (IGO) +8%, Liontown (LTR) +7.3%, Eagers (APE) +5.7%, and Orica (ORI) +5.5%.
Losers: Lifestyle Communities (LIC) -35.1%, Boss Energy (BOE) -14.7%, HMC Capital (HMC) -14.2%, Northern Star (NST) -11.6%, Paladin (PDN) -10.4%, Capstone Copper (CSC) -9%, DigiCo (DGT) -8.6%, Reece (REH) -7.5%, IDP Education (IEL) -7.3%, and Mirvac (MGR) -4.4%.
On the economic and geopolitical front, the markets’ focus has moved back towards tariffs, while the RBA and China also threw some left-field news into the mix:
- On Monday, President Trump threatened a 10% tax on “any country aligning itself with the anti-American policies of BRICS” as the week’s geopolitical fireworks commenced.
- The RBA surprised the market on Tuesday by leaving interest rates unchanged, but equities shrugged off the news, still expecting at least two easing moves later in the year.
- President Trump’s promise of a 50% copper tariff propelled industrial metal to new all-time highs in the US on Tuesday night, but it drifted lower on the LME, dragging ASX names down.
- The healthcare sector struggled towards the end of the week as President Trump threatened 200% tariffs on imported pharmaceuticals in the future.
- On Thursday, Chinese real estate stocks surged ~11% with further stimulus out of Beijing expected, sending iron ore and respective ASX miners higher.
- On Friday, rare earth stocks soared after the US Government took an equity stake in a US operator. We ponder if uranium will be next.
Overseas markets ended the week on the back foot as President Trump lifted his trade offensive; he clearly doesn’t appreciate the TACO acronym! In Europe, the EURO STOXX 50 fell 0.8% while the UK FTSE fared better, only retreating 0.4%. In the US, the financials were the worst-performing sector as the S&P 500 slipped 0.3% while the tech-based NASDAQ fared better, retreating just 0.2%.
- The SPI Futures are calling the ASX200 to open down 0.2% on Monday with BHP Group (BHP) trading up ~20c in the US on Friday night.