The ASX 200 finished firmly lower today as renewed escalation in the Middle East pushed oil back toward US$100/barrel, reigniting inflation and interest-rate concerns. The Aussie 3-year bond yield was up +10bps to 4.72%, while the 10 year yield pushed through 5%, settling at 5.08%.
These are big moves in bonds, pushing bond prices lower. While it was clearly a weak session today, and some sectors were hit hard (Tech), we would have thought that the likes of Real-Estate and Retail would have been sold off more. That implies sellers are exhausted, potentially a bullish read-though for that part of the market.
Tech was the biggest drag, and when bonds yields are up ~10bps across the curve, valuations of long duration investments should come down, it’s just they’ve already come down a long way. There were some pockets of minor strength, ProMedicus (PME) finished lower but traded well up from the worst of the day, while more defensive exposures saw some buying (APA, DBI, SUN) helping the MM Income Portfolio finish only mildly lower, though the Growth Portfolio had a tough day, and has had a tough week overall.
- ASX 200: -66.69pts / -0.75% to 8,772.30
- AUD/USD: 0.6975 / +0.09%
- Best sectors: Energy +0.93%, Financials +0.88%, Utilities +0.80%
- Worst sectors: Information Technology -3.98%, Materials -2.84%, Communications -1.52%
- Small Caps were hit harder, the Small Ords down over 2%.
- Karoon Energy (KAR) +10.84% to $1.79 was the standout performer as surging oil prices drove strong buying across the energy sector. Brent briefly traded above US$100/barrel after Houthi militants attacked two Saudi Arabian tankers in the Red Sea, opening another potential front in the regional supply disruption.
- Woodside Energy (WDS) +1.79% to $32.37 and Santos (STO) +1.53% to $7.97 also advanced as traders increased exposure to energy companies as a hedge against escalating geopolitical risk.
- Beach Energy (BPT) +2.26% to $0.91, Dalrymple Bay Infrastructure (DBI) +1.96% to $5.72 and Origin Energy (ORG) +1.14% also benefited from the stronger energy backdrop and more defensive positioning in the case of DBI.
- Treasury Wine Estates (TWE) +2.60% to $4.73 was among the strongest non-energy names, while Austal (ASB) +2.38% to $3.87 and Stockland (SGP) +2.23% to $4.13 also finished higher.
- The major banks provided meaningful index support. National Australia Bank (NAB) +1.46% to $40.39, ANZ Group (ANZ) +1.42% to $36.47, Westpac (WBC) +1.36% to $37.14 and Commonwealth Bank (CBA) +1.00% to $174.03 all advanced.
- QBE Insurance Group (QBE) +1.39% to $24.85, Suncorp Group (SUN) +0.90% to $19.14 and Macquarie Group (MQG) +0.51% to $255.04 added to the strength across financials.
- Technology was hit hard after Wall Street sold off on renewed concerns about AI spending, with Tesla falling 14.5% and Alphabet losing 6.9% overnight. WiseTech Global (WTC) -4.64%, Xero (XRO) -4.45% to $61.58, TechnologyOne (TNE) -3.90%, NEXTDC (NXT) -3.59% and Megaport (MP1) -3.25% all declined.
- WiseTech Global (WTC) -4.64% has now fallen more than 75% from its June 2025 high – a terrible performance and it’s hard to know what to do with it here. So much weakness has already occurred, it’s probably too late to sell, but we’re uncomfortable holders…
- Materials were also hit. BHP Group (BHP) -2.94% to $58.85, Rio Tinto (RIO) -1.69% to $159.99, Fortescue (FMG) -1.01% to $18.57 and South32 (S32) -3.65% all declined.
- Gold miners were caught in another sharp sell-off as bullion weakened despite escalating geopolitical tensions.
- Northern Star Resources (NST) -3.91%, Evolution Mining (EVN) -2.42%, Newmont Corporation (NEM) -1.53% to $134.76, Genesis Minerals (GMD) -4.40%, Regis Resources (RRL) -5.98% and Westgold Resources (WGX) -2.53% finished lower.
- Smaller gold names were hit especially hard, with Pantoro Gold (PNR) -6.10% to $2.00, Catalyst Metals (CYL) -6.32% to $5.63, Greatland Resources (GGP) -6.35% to $10.03, Predictive Discovery (PDI) -6.67% to $0.63 and Resolute Mining (RSG) -7.04% to $0.93.
- Centuria Capital Group (CNI) -8.49% to $1.46 was the weakest stock in the ASX 200 on Private Credit woes at Centuria Bass – more on this below.
- IperionX (IPX) -7.81% to $3.07, DroneShield (DRO) -7.69% to $2.04 and ALS Ltd (ALQ) -7.59% to $20.46 were in the cross hairs, with ALS downgraded by Jarden.
- Lithium stocks extended their recent weakness, with Liontown Resources (LTR) -7.42% to $1.19, IGO Ltd (IGO) -5.07%, PLS Group (PLS) -2.13% and Mineral Resources (MIN) -2.33% all lower.
- Generation Development Group (GDG) -5.24% gave back part of Thursday’s 37% surge, while Pinnacle Investment Management (PNI) -5.25% and Netwealth Group (NWL) -4.16% also weakened.
- Cochlear (COH) -0.45% received confirmation that its products can continue to enter the US duty-free following the completion of a government investigation. However, this only removes a downside risk rather than resolving the company’s softer implant demand and execution challenges.
- James Hardie Industries (JHX) -0.19% to $36.92 eased after Jarden downgraded the stock from Overweight to Neutral, citing increased risks to the construction sector.
- Brent crude: traded near US$100/bbl after briefly moving above triple figures, with futures up more than 13% for the week as supply risks broadened across the Strait of Hormuz and Red Sea.
- Gold: down to US$4,035/oz after dropping around 2% overnight.
- Asian markets: South Korea’s Kospi fell as much as 6.1%, with Samsung Electronics and SK Hynix both down more than 7%.
- China –1.2%, Hong Kong -1.3% and Japan -2.7%.
- S&P 500 E-mini futures: -4 points / -0.05%
- Dow E-mini futures: +29 points / +0.06%
- US companies we own reporting this week; Chubb (CB US)
